January 14, 2018

If we want to reclaim what it means to be an American, if we want to redefine ourselves as those who celebrate difference and defend civil rights, that begins with understanding the purpose of education.

“We must remember that intelligence is not enough. Intelligence plus character–that is the goal of true education. The complete education gives one not only power of concentration, but worthy objectives upon which to concentrate. The broad education will, therefore, transmit to one not only the accumulated knowledge of the race but also the accumulated experience of social living.”

So for King it wasn’t enough for schools to teach facts. It wasn’t enough to teach skills, math, writing, reading, history and science. The schools are also responsible for teaching children character – how to be good people, how to get along with each other.

When King wrote, there were basically two kinds of school – public and private. Today there is a whole spectrum of public and private each with its own degree of self-governance, fiscal accountability and academic freedom.

Private schools are by their very nature exclusionary. They attract and accept only certain students. These may be those with the highest academics, parental legacies, religious beliefs, or – most often – families that can afford the high tuition. As such, their student bodies are mostly white and affluent.

That is not King’s ideal. That is not the best environment to form character, the best environment in which to learn about people who are different than you and to develop mutual understanding.

Homeschooling is hard to generalize. There is such a wide variety of experiences that can be described under this moniker. However, they often include this feature – children are taught at home by their parent or parents. They may or may not interact with their academic peers and the degree to which they meet and understand different cultures is variable to say the least. They may meet King’s ideal, but frankly the majority of them probably do not.

So we’re left with traditional public schools. Do they instill “intelligence plus character”?

Answer: it depends.

There are many public schools where children of different races, nationalities, religions, and creeds meet, interact and learn together side-by-side.

Students wearing hajibs learn next to those wearing yarmulkes. Students with black skin and white skin partner with each other to complete class projects. Students with parents who emigrated to this country as refugees become friends with those whose parents can trace their ancestors back to the Revolutionary War.

Which brings me to the second section of King’s early essay that pops off the page:

“The function of education, therefore, is to teach one to think intensively and to think critically. But education which stops with efficiency may prove the greatest menace to society. The most dangerous criminal may be the man gifted with reason, but with no morals.”

Seventy one years ago, King was warning us about the situation we suffer today.

When we allow academics to be distinct from character and understanding, we put ourselves at the mercy of leaders with “reason, but with no morals.”

July 30, 2017

A new study finds that believing society is fair can lead disadvantaged adolescents to act out and engage in risky behavior.

Brighton Park is a predominantly Latino community on the southwest side of Chicago. It’s a neighborhood threatened by poverty, gang violence, ICE raids, and isolation—in a city where income, race, and zip code can determine access to jobs, schools, healthy food, and essential services. It is against this backdrop that the Chicago teacher Xian Franzinger Barrett arrived at the neighborhood’s elementary school in 2014.

Recognizing the vast economic and racial inequalities his students faced, he chose what some might consider a radical approach for his writing and social-studies classes, weaving in concepts such as racism, classism, oppression, and prejudice. Barrett said it was vital to reject the oft-perpetuated narrative that society is fair and equal to address students’ questions and concerns about their current conditions. And Brighton Elementary’s seventh- and eighth-graders quickly put the lessons to work—confronting the school board over inequitable funding, fighting to install a playground, and creating a classroom library focused on black and Latino authors.

“Students who are told that things are fair implode pretty quickly in middle school as self-doubt hits them,” he said, “and they begin to blame themselves for problems they can’t control.”

Barrett’s personal observation is validated by a newly published study in the peer-reviewed journal Child Development that finds traditionally marginalized youth who grew up believing in the American ideal that hard work and perseverance naturally lead to success show a decline in self-esteem and an increase in risky behaviors during their middle-school years. The research is considered the first evidence linking preteens’ emotional and behavioral outcomes to their belief in meritocracy, the widely held assertion that individual merit is always rewarded.

November 18, 2013

Apparently working together as a community is anti-American 'Communism' now.

Photo Credit: Kimihiro Hoshino/AFP/Getty Images)

November 17, 2013 |

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Heartland Institute President Joseph Bast called the public school system a "socialist regime." Michelle Rheecautions us against commending students for their 'participation' in sports and other activities.

Privatizers believe that any form of working together as a community is anti-American. To them, individual achievement is all that matters. They're now applying their winner-take-all profit motive to our children.

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Heartland Institute President Joseph Bast called the public school system a "socialist regime." Michelle Rheecautions us against commending students for their 'participation' in sports and other activities.Privatizers believe that any form of working together as a community is anti-American. To them, individual achievement is all that matters. They're now applying their winner-take-all profit motive to our children.We're Sliding Backwards, Towards "Separate and Unequal"

We're Sliding Backwards, Towards "Separate and Unequal"

In 1954, the Supreme Court decision in Brown vs. the Board of Education seemed to place our country on the right track. Chief Justice Earl Warren said that education "is a right which must be made available to all on equal terms." Thurgood Marshall insisted on "the right of every American to an equal start in life."

But then we got derailed. We've become a nation of inequality, worse than ever before, worse than during the racist "separate but equal" policy of Plessy vs. Ferguson in 1896. The Civil Rights Project at UCLA shows that "segregated schools are systematically linked to unequal educational opportunities." The Economic Policy Institute tells us that "African American students are more isolated than they were 40 years ago."

The privatizers clamor for vouchers and charters to improve education, but such methods generally don't serve those who need it most. According to a Center on Education Policy report, private schools serve 12 percent of the nation's elementary and secondary students, but only one percent of disabled students. Forty-three percent of public school students are from minority families, compared to 24% of private school students.

Meanwhile, as teachers continue to get blamed, the Census Bureau tells us that an incredible 38 percent of black children live in poverty.

The Underprivileged Have Been Cheated Out Of Taxes

A Center on Budget and Policy Priorities (CBPP) report revealed that total K-12 education cuts for fiscal 2012 were about $12.7 billion.

Almost 90 percent of K-12 funding comes from state and local taxes. But in 2011 and 2012, 155 of the largest U.S. corporations paid only about half of their required state taxes. That comes to $14 billion per year in unpaid taxes, more than the K-12 cuts.

Untaxed and Unqualified Foundations Want To "Save Our Schools"

The "starve the beast" mentality allows the privatizers to claim that our "Soviet-style" schools don't work, and that a business approach must be used instead. Philanthropists like Bill Gates and Eli Broad and Michael Bloomberg and Rupert Murdoch and the Walton family, who have little educational experience among them, and who have little accountability to the public, are promoting "education reform" with lots of standardized testing.

But according to the National Research Council, "The tests that are typically used to measure performance in education fall short of providing a complete measure of desired educational outcomes in many ways." Diane Ravitch notes that the test-based Common Core standards were developed by a Gates-funded organization with almost no public input. Desperate states had to adopt the standards to get funding.

Bill Gates may be well-intentioned, but he's a tech guy, and his programming of children into educational objects is disturbing. One of his ideas is to videotape teachers and then analyze their performances. The means of choosing 'analysts' is unclear. Another Gates idea is the Galvanic Skin Response bracelet, which would be attached to a child to measure classroom engagement, and ultimately gauge teacher performance. It all sounds like a drug company's test lab.

As noted by Ravitch and others, philanthropic organizations tend to contribute to "like-minded entities," which are likely to exclude representatives of the neediest community organizations. They are also tax-exempt. And when educational experiments go wrong, they can just leave their mess behind and move on to their next project.

Getting Past Our "Exceptionalism"

If we're willing to look beyond our borders for help, we will see the short-sightedness of our educational "reforms." Finland's schools were considered mediocre 30 years ago, but they've achieved a remarkableturnaround by essentially challenging their teachers before they're entrusted with the welfare of the children. Most Finnish teachers are unionized, and they undergo rigorous masters-level training to ensure proficiency in the teaching profession, which is held in the same high esteem as law and medicine. In keeping with this respect for learning, government funding is applied equally to all schools, classes in the arts are available to all students, and tuition is free.

It's not just Finland with such impressive results. Research at the National Center on Education and the Economy has confirmed that educational systems in Japan, Shanghai, and Ontario, Canada have prospered with an emphasis on the preparation of teachers for the essential task of instructing their young people.

A Strong Community Leads To Individual Success

George Lakoff summarizes: "The Public provides freedom...Individualism begins after the roads are built, after individualists have had an education, after medical research has cured their diseases..."

Public education is vital to the promise of equal opportunity for all. But it will only succeed if we work together as a community, and stop listening to the voices of profit and inexperience.

Paul Buchheit is a college teacher, a writer for progressive publications, and the founder and developer of social justice and educational websites (UsAgainstGreed.org, PayUpNow.org, RappingHistory.org).

Walmart just reported shrinking sales for a third straight quarter. What’s going on? Explained William S. Simon, the CEO of Walmart, referring to the company’s customers, “their income is going down while food costs are not. Gas and energy prices, while they’re abating, I think they’re still eating up a big piece of the customer’s budget.”

Walmart’s CEO gets it. Most of Walmart’s customers are still in the Great Recession, grappling with stagnant or declining pay. So, naturally, Walmart’s sales are dropping.

But what Walmart’s CEO doesn’t get is that a large portion of Walmart’s customers are lower-wage workers who are working at places like … Walmart. And Walmart, not incidentally, refuses to raise its median wage (including its army of part-timers) of $8.80 an hour.

Walmart isn’t your average mom-and-pop operation. It’s the largest employer in America. As such, it’s the trendsetter for millions of other employers of low-wage workers. As long as Walmart keeps its wages at or near the bottom, other low-wage employers keep wages there, too. All they need do is offer $8.85 an hour to have their pick.

On the other hand, if Walmart were to boost its wages, other employers of low-wage workers would have to follow suit in order to attract the employees they need.

Get it? Walmart is so huge that a wage boost at Walmart would ripple through the entire economy, putting more money in the pockets of low-wage workers. This would help boost the entire economy — including Walmart’s own sales. (This is also an argument for a substantial hike in the minimum wage.)

Walmart could learn a thing or two from Henry Ford, who almost exactly a century ago decided to pay his workers three times the typical factory wage at the time. The Wall Street Journal called Ford a traitor to his class but he proved to be a cunning businessman.

Ford’s decision helped boost factory wages across the board — enabling so many working people to buy Model Ts that Ford’s revenues soared far ahead of his increased payrolls, and he made a fortune.

So why can’t Walmart learn from Ford? Because Walmart’s business model is static, depending on cheap labor rather than increased sales, and it doesn’t account for Walmart’s impact on the rest of the economy.

You can help teach Walmart how much power its consumers have: Stand with its workers who deserve a raise, and boycott Walmart on the most important sales day of the year, November 29.

September 01, 2013

Yesterday a Walmart spokesman criticized the petition I’ve been circulating that asks Walmart (and McDonalds) to pay their employees at least $15 an hour.

Walmart’s spokesman told the Huffington Post that my petition fails to mention that Walmart is a major job creator and that it promotes some of its employees.

The spokesman is correct. In fact, Walmart is America’s biggest employer. And I’d be shocked if some of its employees weren’t promoted.

But the brute fact is Walmart’s typical employee is still paid less than $9 an hour.

To offer lousy jobs on such an extraordinary scale is not something to brag about. Indeed, the point of the petition — as well as the national movement to raise the minimum wage to $15 an hour — is to recognize that most people who work for big-box retailers like Walmart, as well as those who work in the fast-food industry, are adults. They are responsible for bringing home a significant share of their family’s income. A decent society requires they be paid enough to lift them and their families out of poverty.

When Martin Luther King, Jr., led the March to Washington for Jobs and Justice, fifty years ago this week, one of the objectives of that March was to raise the minimum wage to $2 an hour. $2 an hour in 1963, adjusted for inflation, comes to over $15 an hour in today’s dollars. Walmart doesn’t come close to the American dream.

July 30, 2013

"Four years after the [Great Recession of 2008] median family income has fallen by 10 percent in real terms. ...[T]he number of full-time breadwinner jobs in the US economy is still down by 5 million; that is, it is more than 8 percent below its late 2007 level. In short, the Main Street economy has been failing for years, and now the massive debt deflation [the paying down of debt rather than consuming] under way will aggravate that condition enormously [since GDP is 70% consumption], leaving millions of citizens to depend on intermittent employment in low-paying part-time jobs or to fall back on family, friends, charity, or nothing at all." - David Stockman, The Great Deformation.

A breadwinner job is a job that is sufficient to support a family including rent or mortgage, car payment, adequate food and nutrition, health care, education and savings for retirement. That meant a job paying $50,000 a year in 2007 when the US economy peaked. At that time there were 71.8 million "breadwinner" jobs in construction, manufacturing, white-collar professions, government and the like. These jobs accounted for more than half of the nation's 138 million total payroll.

Breadwinner jobs are the foundation of the Main Street economy. But after losing 5.6 million of these jobs during the Great Recession, less than 4 percent of these jobs have been recovered. The 3 million jobs recovered since the recession ended in 2009 have been mainly in part-time work, temp jobs and in health, education and social services (the HES complex).

More than half of the recovery (1.6 million jobs) occurred in the part-time economy which presently includes 36.4 million jobs in retail, hotels, restaurants, shoe-shine stands, barrista kiosks and temporary help agencies where the average annualized compensation was only $19,000. The balance consisting of 1.1 million jobs was in the HES complex which consists of 30.7 million jobs in health, education and social services. Average compensation in these jobs was about $35,000. annually. These jobs are almost entirely dependent on government spending and as such are subject to being eliminated at the whims of a deficit cutting Congress. That leaves only approximately 300,000 breadwinner jobs created since the Great Recession!

A family would need two of the HES type jobs to be the equivalent of one breadwinner job or three temp or part time jobs to be the equivalent. Simply put this is why both the husband and the wife need to be out in the workforce whereas a generation ago only one member of the household needed to be in the workforce with the other member (usually the wife) staying home raising the children and taking care of the house. This is what women's liberation has wrought! Two members of the household in the workforce and nobody taking care of the children.

According to a report in ProPublica, roughly 2.7 million temp workers are currently employed in the US — a sector that’s roaring back 10 times faster than private-sector employment as a whole. Many temp workers start work with the promise of a full time job after a 3 month or 6 month probationary period - only to find their times extended to the point where they can be at the same worksite for years, but as an employee of the temp agency with no benefits, vacation or raises. More and more companies are turning to temp labor to avoid the insurance costs and other obligations of a full-time staff. Even nurses, cooks and professors are being hired as temp workers.

Temp workers have few rights. Complaints to management are frequently referred to the temp agency itself and are not subject to being considered at the company where the temp worker has actually been working. They are not day laborers looking for an odd job from a passing contractor. They are regular employees of temp agencies working in the supply chain of many of America’s largest companies – Walmart, Macy’s, Nike, Frito-Lay. They make our frozen pizzas, sort the recycling from our trash, cut our vegetables and clean our imported fish. They unload clothing and toys made overseas and pack them to fill our store shelves. They are as important to the global economy as shipping containers and Asian garment workers.

Many get by on minimum wage, renting rooms in rundown houses, eating dinners of beans and potatoes, and surviving on food banks and taxpayer-funded health care. They almost never get benefits and have little opportunity for advancement.

Across America, temporary work has become a mainstay of the economy, leading to the proliferation of what researchers have begun to call “temp towns.” They are often dense Latino neighborhoods teeming with temp agencies. Or they are cities where it has become nearly impossible even for whites and African-Americans with vocational training to find factory and warehouse work without first being directed to a temp firm.

In June, the Labor Department reported that the nation had more temp workers than ever before: 2.7 million. Overall, almost one-fifth of the total job growth since the recession ended in mid-2009 has been in the temp sector, federal data shows. But according to the American Staffing Association, the temp industry’s trade group, the pool is even larger: Every year, a tenth of all U.S. workers finds a job at a temp agency.

A healthy Main Street economy depends upon growth in breadwinner type jobs, but there has been none. The Bureau of Labor statistics (BLS) reported 71.8 million breadwinner jobs in January 2000, but 7 years later in 2007,after the huge boom in the housing, real estate, household consumption and stock market sectors, there were still exactly only 71.8 million jobs of this type.

To be sure, the economy did grow during this period. Nominal GDP grew by 40% or about $4 trillion. However, outstanding debt grew by $20 trillion during this same period. So the economy was being pushed along by a torrent of debt far exceeding any real economic growth due to rising productivity and earned income.This debt tsunami which induced only modest GDP growth makes it clear that the Fed policy of increasing debt in order to "grow the economy" is a total failure. As people pay down their debt (debt deflation) instead of buying more stuff, GDP growth will suffer. GDP growth in the real economy is much more modest than reported GDP because 8% of GDP (in 2010) was contributed by financial services, primarily Wall Street speculation and hedge fund activities which often tear down the real economy for the benefit of speculators. Case in point: Twinkies are back on store shelves after being taken over by a hedge fund and unionized workers being laid off. See "Twinkies' Twisted Tale: Junk Food Devoured by Junk Bonds"

While the Federal Reserve has pumped cash into the big Wall Street banks and the upper one percent of wealthy investors, very little of this money has trickled down to Main Street. One of the Fed's missions is to increase employment. However, the American economy has been almost entirely bereft of job growth. For the entire 12 year period since early 2000, it has generated a net gain of only 18,000 jobs per month, a figure that is just one eighth of the labor force growth rate. The only thing happening on the "jobs creation" front in the last 10 years in addition to the massive creation of temp and part time jobs is a huge creation of the bedpan and diploma mill brigade which consists of employment in nursing homes, hospitals, home health agencies, and for-profit colleges.

The sunny job creation statistics cited by the Fed and by anxious politicians eager for good sounding economic news are a complete sham. The fact is that monetray policy in the US is all about fueling the speculative urges of Wall Street, not about the economic health of Main Street. This obfuscation is especially true with respect to the oft cited figure of the creation of 3 million jobs since the recession ended. What they don't tell you is that the majority of these jobs were part-time jobs in bars, restaurants, retail emporiums and temporary employment agencies which supply most of the factory and warehouse jobs for the likes of Microsoft, Amazon and Wal-Mart.

The recovery, such as it is, has been fueled by the massive creation of debt in the hopes that consumers will be persuaded to borrow and spend since 70 percent of US GDP is comprised of consumer spending. If instead consumers choose to pay down personal debt (debt deflation) which is the smart thing to do, the American economy will go into recession. The Federal Reserve is trying to levitate the economy by gigantic infusions of free money into the Wall Street casino in the hopes of creating another real estate bubble or a bubble of any sort really. Please give us a bubble, any bubble. The only economic activity that Fed chief Bernanke is producing with his helicopter free money drops is speculation on Wall Street. The inflation of speculative bubbles will only lead to another bubble pricking collapse since the smart fellows at the Fed and in the government did not learn anything from the economic collapse of 2008.

The American people should not stand for another too-big-to-fail government bail-out of Wall Street. The next time that happens there may be a revolution to go along with it. People are getting tired of the fondling of Wall Street while the people get gypped. In particular they have been gypped lately with the huge accumulation of student loan debt and the refusal to write down any homeowner mortgages while foreclosing mightily instead. What we need is not catering to the Wall Street speculative economy of the 1%, but consideration for the Main Street economy of the 99%. A recent San Diego Free Press Article about an unconditional basic income for the masses would be an antidote to the massive giveaways of free money to Wall Street.

July 03, 2013

Going to college can seem like a choice between impossibly high payments while in school or a crushing debt load for years afterward, but one state is experimenting with a third way.

This week, the Oregon Legislature approved a plan that could allow students to attend state colleges without paying tuition or taking out traditional loans. Instead, they would commit a small percentage of their future incomes to repaying the state; those who earn very little would pay very little.

The proposal faces a series of procedural and practical hurdles and will not go into effect for at least a few years, but it could point to a new direction in the long-running debate over how to cope with the rising cost of higher education. While the approach has been used in Australia, national education groups say they do not know of any university in the United States trying it.

The Oregon plan had an unusual, and unusually swift, gestation. Less than a year ago, neither elected officials nor advocacy groups there had even considered it.

It began last fall in a class at Portland State University called “Student Debt: Economics, Policy and Advocacy,” taught by Barbara Dudley, a longtime political activist who teaches in the school of urban and public affairs, and Mary C. King, a professor of economics. Ms. Dudley was referred to John R. Burbank, executive director of the Economic Opportunity Institute, a liberal policy group based in Seattle, who had studied the no-tuition approach. She, in turn, referred the students to him, and they adopted the idea as their group project for the semester.

The students and Ms. Dudley later made a presentation to state lawmakers, including state Representative Michael Dembrow, Democrat of Portland and chairman of the higher education committee. The Working Families Party of Oregon — of which Ms. Dudley was a co-founder — put the proposal at the top of its legislative agenda, and Mr. Dembrow and others ran with it.

“It’s unbelievable that it’s all happened so fast,” one of the students, Ariel R. Gruver, said this week. “We never imagined that we would actually accomplish something like this, and definitely not in such a short time.”

Lawmakers held hearings on the plan, debated amendments, and passed it, with the final vote taking place Monday in the State Senate. The Legislature’s majorities are Democratic — as is the governor, John Kitzhaber — but the vote in both houses was unanimous. An aide to the governor said Mr. Kitzhaber was likely to sign the bill.

“When we talked to legislators, conservatives said it appealed to them because it’s a contract between the student and the state, so they see it as a transaction, not as a grant,” said Nathan E. Hunt, one of the students who proposed the plan.

The speed and unanimity offer a sharp contrast with Washington, where Democrats and Republicans have been unable to agree on a new law on federal student loans, resulting in the doubling of interest rates as of Monday.

“Everybody is concerned about the problem of student debt load and the rising cost of tuition,” Mr. Debrow said. “Not everybody agrees on the causes, but everybody agrees on the effect. We all hear about it when we’re knocking on doors, running for office.”

For many legislators, he added, the issue has become personal. “It affects their kids, their grandkids,” he said.

The bill instructs the state’s Higher Education Coordinating Commission to design a pilot program, which would then require the Legislature’s approval. For now, only the broadest outlines are clear.

The idea calls for the state to provide some money to get the program running — how much would depend on how big the pilot is — but that in the future, payments from former students would sustain it. The plan’s supporters have estimated that for it to work, the state would have to take about 3 percent of a former student’s earnings for 20 years, in the case of someone who earned a bachelor’s degree.

June 24, 2013

Online courses will create two-tiered system, with the wealthy taking classes face-to-face and making social connections, and middle-class and poorer students learning remotely.

Photo Credit: Shutterstock.com/3dfoto

June 18, 2013 |

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In a college-level course about social justice issues, you can often find students sitting in a circle discussing society’s inequalities with one another. But in Harvard professor Michael Sandel’s JusticeX class, a massive open online course (MOOC), tens of thousands of students watch Sandel lecturing on, among other things, affirmative action, income distribution, same-sex marriage and property rights all from their laptops.

When philosophy professors at San Jose State University were encouraged to have their students take Sandel’s MOOC, they were strongly against their students taking an online course in justice. So they wrote an open letter to Sandel (signed by all of them).

“The move to MOOCs comes at great peril to our university,” the letter said, “We regard such courses as a serious compromise of quality of education and, ironically for a social justice course, a case of social injustice.”

MOOCs have been in the news lately, from the Chronicle of Higher Education to the New York Times to the Wall Street Journal, and legislation in California calls for public institutions to use MOOCs for students who can’t get into overcrowded courses. MOOCs differ from regular online course in that they are free (although students can be charged for credit), and tens of thousands of students can be in one class. Often grading is done by computer or by peers. The biggest three providers of MOOCs are edX, a nonprofit formed by Massachusetts Institute of Technology and Harvard; Udacity, launched by Sebastian Thrun, a Stanford professor and the founder of Google’s autonomous-car program; and Coursera, a nonprofit started by two other Stanford computer science professors, Daphne Koller and Andrew Ng.

Hundreds of universities in the United States are now offering MOOCs, and millions of students throughout the world have signed up for them, although completion rates are extremely low, around 7 percent according to a study cited in Inside Higher Ed.

The business model for MOOCs is unclear, with providers charging the universities for the platform, and some planning to charge students for credit.

Proponents hail MOOCs as a way to provide access to students and cut costs. In an article in Smithsonian Magazine, Thrun said that when he opened up a class he taught in artificial intelligence to anyone with an Internet connection, upwards of 100,000 students signed up for the class (more people, he said, than the number of attendees at a Lady Gaga concert he went to). Thrun also said he got heartfelt emails from the students saying how much the class meant to them.

But critics, like those at SJ State, see MOOCs as providing an inferior education, increasing the digital divide, cutting human interaction out of learning and opening the door to privatizing public education while turning professors into glorified teachers’ aides.

“This looks like a transfer model of education,” said Noam Cook, a professor of philosophy at SJ State, referring to what Brazilian educator Paolo Freire called “banking education” — where the teacher deposits information in the students’ minds. “I don’t think that’s what higher education is about. It’s about helping students think critically and develop understanding.”

Cook pointed out that anyone can already watch a Sandel lecture on YouTube or buy his book, so why should universities pay edX a $250,000 base fee to develop the platform, then $50,000 for each additional time the course is offered? Cook added that the professors at SJ State know their students and design classes with them in mind.

“Specifically of concern to us is what message it’s sending,’” he said. “There’s a message there that Harvard students deserve to have a living, breathing professor answering questions and SJ State students do not.”

Patricia McGuire, the president of Trinity University in Washington DC, agrees MOOCs will create two tiers of education: those who can afford it will still go to elite schools where they can meet professors and peers, make connections and have discussions face-to-face about what they are learning, while middle-class and poorer students take MOOCs. She adds that if education were fully funded, there wouldn’t be a need for MOOCs.

“Those of us who educate predominantly students of color or predominately low-income students see them shunted off into a form of education that is not tested,” she said. “Their education is being cheapened because of legislators de-investing in higher education.”

Anyone can sign up for a MOOC online without being enrolled in a university. But many colleges are offering them on their own or "blended" with regular classes for credit. Now the push seems to be to offer them for more remedial classes.

Until about nine months ago, McGuire hadn’t even heard of MOOCs, and she finds it disturbing how quickly colleges have rushed to sign up for them. Trinity uses technology pervasively, she said, but classes tend to be small with the average size around 25. When someone told her MOOCs were the solution for underperforming students, she was more than skeptical.

“Fifty percent of our students come from the DC public schools and need a lot of support,” she said. “I know from experience they need tutorials. The idea that they can take an online course with 10,000 others and benefit — I found that preposterous.”

Nor does McGuire buy the idea that MOOCs were created with "educational access for all" in mind.

“The idea that this is going to stay free and these companies have the best, most altruistic motives is just not believable,” she said. “Somebody is going to make a lot of money off of this.”

In an interview in the Wall Street Journal, Koller, one of the founders of Coursera said the company has already started to make, as she called it, “nontrivial revenue.” She said more than 10,000 people opted into the company’s verified certificate program, and Coursera had made almost $500,000 in a few months through this program.

Officials at Coursera said they were unable to grant an interview “due to the high volume of requests that [they] regularly receive,” but sent an overview of the company and responses to frequently asked questions. The company, which has students in more than 220 countries and partners with more than 60 universities, has received $22 million in funding from Kleiner Perkins Caufield & Byers, and also "partner universities" Penn and Caltech. Besides charging students for credit, it stated in the overview, the company might charge for connecting students with prospective employers.

Cook questions the ethics.

“So they’re using public education as a way of making money for investors in private corporations,” he said.

Proponents see MOOCs as a much needed revamp of education (Secretary of Education Arne Duncan called them “disruptive innovators”), but McGuire doesn’t think they break new ground.

“They’re not very innovative. You’ve been able to buy CDs for years of things like great lectures from Harvard,” she said. “It’s just the fact they’re delivered on the web. The tech community wants us to believe anything they invent is going to save us.”

Cook, the professor at San Jose State, agrees that a lot about MOOCs sounds familiar.

“A lot of what they’re saying currently is virtually indistinguishable from what people were saying about role of classroom TV in the '50s,” Cook said. “It wasted time and talent and money, and it also delayed by many years figuring out what TV is good for. Then we all had technical amnesia and replayed it exactly with the personal computer in the '80s. Then we did the same thing with the Internet.”

Cook said he thinks university administrators feel pressured to leap on the MOOC bandwagon.

“We’re told by those promoting it, it’s the future and it’s happening and we’ll be left behind,” Cook said.

That’s been McGuire’s experience as well. Recently, she said, a university president told her that he doesn’t want to adopt MOOCs, but he feels he has to because everyone else is.

“What’s really horrifying about this lemming-like movement is we’re supposed to be a little thoughtful,” she said. “It has a Tom Sawyer quality to it, and it’s like everyone is trying to paint the fence.”

But other colleges besides SJ State have recently expressed skepticism about MOOCs: 58 professors at Harvard wrote a letter asking for more oversight of MOOCs, saying they are “deeply concerned about the program’s cost and consequences;” professors at Amherst College in Massachusetts voted against joining edX; and the provost at American University in Washington, DC, declared a moratorium on MOOCs.

“Faculty members don’t want to experiment with MOOCs until they know more about costs and benefits,” said Barlow Burke, a law professor and chair of the Faculty Senate at American. “MOOCs involve offerings to the world, and we’re engaged in offering education to particular students.”

Peter Jacoby, an English professor at Mesa College in San Diego, decided to try a MOOC out of curiosity. He joined 30,000 other students in a Coursera offering from the University of Pennsylvania, “Modern and Contemporary Poetry.”

Although Jacoby finished the course (one of less than 10 percent who did), he wasn’t impressed. He found the lectures disappointing and the feedback he got on discussion boards was nothing deeper than “Great comment!”

In the Coursera overview, it said: “Our peer assessment pedagogy draws on research regarding the process and efficacy of peer grading as well as crowd sourcing, with the goal of creating a system that produces a valuable learning experiences for both the students submitting and the students grading the work.”

Jacoby didn’t find it valuable, but rather crude and perfunctory with quizzes of just a couple of questions with three or four choices, graded by a machine, and 300-word essays, following a rubric.

As for using MOOCs with remedial students, Jacoby is blunt.

“I think it’s stupid,” he said. “Nobody is going to learn anything. I’ve taught remedial students before, and I believe what they need the most is one-on-one attention. They need a teacher who can find out what they need and can give them attention, so they can get over hurdles.”

Another professor who took a MOOC out of curiosity was Larry Cuban, professor emeritus of education at Stanford. Cuban took one on artificial intelligence, and he said his experience was a good one—he liked the lectures and the way it was taught, but he felt too busy with his own teaching and a book he was writing and didn’t finish the course.

“Ninety percent drop out of these things,” he said. “You have to be highly motivated and you have to be interested in the content and have self-discipline, and those aren’t in large supply.”

This high dropout rate for MOOCs isn’t stopping administrators who see them as a way to increase access while keeping costs down. The president of San Jose State, Mohammad Qayoumi, an enthusiastic supporter of MOOCs, has presented his ideas to California governor Jerry Brown, and he has said that universities should take a lesson from Walmart by looking to expand online.

The philosophy professors who wrote the letter refusing to use edX don’t think universities should be looking to big businesses for inspiration, and believe California State University is trying to devalue their labor. In the letter they wrote:

"Let's not kid ourselves; administrators at the CSU are beginning a process of replacing faculty with cheap online education."

If Qayoumi and other administrators really want to cut costs, they should start with their own positions, said Laurie Essig, an associate professor of sociology and women’s and gender studies at Middlebury College, who wrote a tongue-in-cheek piece in The Chronicle of Higher Education titled"It’s MOOAs, [Massive Open Online Administrations] Not MOOCs, That Will Transform Higher Education.”

Essig cites a study from the conservative Goldwater Institute, which said the number of administrators between 1993 and 2007 grew by 39 percent.

“If you look at salaries of people in administration, they make way more,” she said. “There are deans of everything now, and they make twice to five times what teachers make. Rather than monetizing teaching, let’s look at the rising costs, and they’re in administration.”

About the idea of teaching tens of thousands of people at once, Essig uses the same language as Jacoby.

“You can’t teach 200,000 people,” she said. “That’s just stupid, and that’s not how teaching happens. It happens in something called human interaction and through dialogue and conversation. There are some rock star professors. … But with 100,000 students, that’s no more teaching than a Facebook friendship is a real friendship.”

Essig said costs for college have gone up partly because of credit deregulation and banks offering loans to students that they struggle to repay. We need to fully fund education so enough classes can be offered — not try and do it on the cheap. These massive classes that discount teaching and personal interaction won’t help students learn, she said — and they’re coming from the people who created the problem in the first place. While Essig, like MOOC proponents, believes there should be a radical change in education, she demands a path that addresses the fundamental problems with higher education.

“I’d love to try something completely different,” she said. “Let’s try making colleges about education rather than administration, and let’s try making them about education rather than making money for banks. Let’s have real, stable full-time jobs and not exploit people. Let’s follow the money. Who’s getting behind the MOOCs are administrators who are making huge amounts of money and the people who run these companies. I will never believe that people who stand to make hundreds of thousands of dollars have the best interests of students at heart.”

Emily Wilson is a freelance writer and teaches basic skills at City College of San Francisco.

June 06, 2013

High school drop-out David Karp just sold Tumblr to Yahoo for $1.1 billion. His share of the take was a cool $250 million. I guess nobody ever told him that high school drop-outs are doomed to high unemployment and low wages. Defying every societal stereotype, none of this propaganda from the education-industrial complex deterred him from going ahead and doing what he wanted which was being a software developer. Karp is 26 years old. Having not wasted a bunch of time in high school and college, (Karp dropped out of high school at age 15) he instead got on with life, which only goes to show that, if you really know want you want to do in life, high school and college are mainly a waste of time. You can become an expert in any field without having a degree or a diploma.

Karp follows a long line of high tech billionaire college dropouts such as Bill Gates (Microsoft), Paul Allen (Microsoft), Steve Jobs (Apple), Larry Ellison (Oracle), Michael Dell (Dell Computer), Mark Zuckerberg (Facebook) and Jack Dorsey (Twitter and the Square). It seems to be the rule rather than the exception that in the high tech field as well as in many others those who do the best and achieve the most are the ones who strike out on their own rather than pursuing a piece of paper which supposedly announces to society that they are acceptable for employment. One of the few exceptions is local billionaire Irwin Jacobs, founder of Qualcomm, who actually has a PhD from MIT.

Marissa Mayer, CEO of Yahoo, announced that Karp would stay on as CEO of Tumblr. At an age when most college students are emerging from grad school with $100,000 in debt, Karp has already made a fortune and created a life for himself. Karp joins 17 year old high school student Nick D’Aloisio who sold his news aggregator app, Summly, to Yahoo in March for $30 million. Evidently, Marissa Mayer has an affinity for young guys who develop the next cool thing. For her it's all about seeking out the "cool." Wahoo, this girl is on fire! Whether or not D'Aloisio will join Karp as a high school drop-out is not clear. He's going to start work in Yahoo's London office. Hey, he got a job without a college degree or even a high school diploma and $30 million to boot!

On the other hand, the Bureau of Labor Statistics projects that for the top ten fastest growing occupations for the years 2010 - 2020, only two will require a college degree. Four don't even require a high school diploma! Two require an Associate's Degree.

Student loan debt is over 1 trillion dollars, greater than outstanding aggregate credit card debt. Yet so many people have bought the myth hook, line and sinker that the only way to get ahead in life is to obtain a college degree. Student loan debt will follow them the rest of their lives as it's the only form of debt that can't be discharged in bankruptcy. They will find that even their social security checks can be garnished! Some social security recipients are already finding that out. The Treasury Department has been withholding as much as 15 percent of Social Security benefits from a rapidly growing number of Social Security recipients who have fallen behind on federal student loans.

The first three months of 2013 were the worst on record for student loan defaults. Most of the outstanding student loan debt has been racked up at for profit colleges such as University of Phoenix. CNBC reports:

"Credit-rating firm Equifax said $3.5 billion in government and private student loans went bad in the first three months of 2013, the most since the company began keeping track. The U.S. Department of Education said 6.8 million federal student loan borrowers are now in default, representing $85 billion in debt. And the department’s systems for collecting the bad loans are struggling to keep up."

Young people need to wake up and smell the coffee and cast off the yoke of propaganda that leads them to believe that a college education is a panacea. You can become an expert in any field without a college or even a high school education by just devoting yourself to studying and learning as much as possible about that field starting at an early age. The educational tools are all available on the internet or in libraries. You don't need to be spoon fed by a bunch of professors. Any real learning is learning that you do yourself and not just to pass some test.

More than half of all recent graduates are either unemployed or working in jobs that don't require a college diploma. There is a surfeit of college degrees to the extent that they are being required for the most casual jobs just because employers can afford to be choosy, not that the job has anything remotely to do with the training received in college. According to Ohio University economics professor Richard Vedder, "Employers seeing a surplus of college graduates and looking to fill jobs are just tacking on that requirement. De facto, a college degree becomes a job requirement for becoming a bartender." Or a barrista. In a study by Richard Arum and Josipa Roksa, entitledAcademically Adrift, the authors find that at least a third of students gain no measurable skills during their four years in college. Furthermore, for the rest their increase in knowledge is minimal.

So what is the point of a college degree? The heart of the matter is that what going to college is really all about is not gaining an education but gaining a credential. That credential tells a prospective employer that the holder was smart enough to get into college, enough of a conformist to put up with all the bullshit, and compliant enough to sit there for four years. Presumably, he or she would make a docile and compliant employee and a docile and compliant consumer, in other words, a good American living the American Dream. But for many the American Dream has become the American Nightmare. For many the dream of living independently goes by the wayside and they have to move back into their parents' house. For many their payments on their student loans take up most of their meager paychecks, and late payments, forebearances and defaults double and triple the amount owed.

But David Karp and Nick D'Aloisio are doing just fine, thank you. They didn't buy the bullshit about going to college.

May 15, 2013

Former Secretary of Education, William Bennett, has written a book, Is College Worth It?. Evidently even education experts are starting to question the value of obtaining a college education especially if it means taking on a mountain of debt, and there is no guarantee that once graduated there will even be a job there waiting so that payments on that debt can even begin. If not, the college graduate faces delinquency, default and penalties that can add greatly to the original debt making it all but insurmountable and one that will follow the individual for the rest of his or her life.

There seems to be a myth that a college education is part of the American dream and that not having acquired one makes one a loser. However, consider this. Some of the greatest contributors to society and some of the richest people never graduated from college. Billionaires such as Microsoft co-founders Bill Gates and Paul Allen, the late Steve Jobs, Oracle CEO Larry Ellison, Facebook founder Mark Zuckerberg, Michael Dell of Dell Computers and Twitter founder Jack Dorsey are all college drop-outs and high tech guys. So not graduating from college didn't limit their intellectual or technical development or achievements.

Contrary to popular belief most of the great contributors to society have been tinkerers and hobbyists rather than college graduates. Just one example: the personal computer. The first real computer was made by Steve Wozniak who was co-founder of Apple with Steve Jobs. Steve Jobs himself actually knew nothing about computer hardware or software. He couldn't program to save his soul. Steve Wozniak was a hobbyist who actually single-handedly created the first computer, the Apple I. He had the hands on know-how to place electronic components on a circuit board in the most efficient manner. Without him Jobs would have had nothing to sell. By the way Wozniak was also a college dropout.

With the dearth of available jobs for college graduates, more pundits are advising young people to create their own jobs. Today you cannot expect that a job will just be provided to you. New York Times columnist Thomas Friedman says Need a Job? Invent It. He writes: "[Today] there is increasingly no such thing as a high-wage, middle-skilled job — the thing that sustained the middle class in the last generation."

Harvard education specialist Tony Wagner says:

“We teach and test things most students have no interest in and will never need, and facts that they can Google and will forget as soon as the test is over,” said Wagner. “Because of this, the longer kids are in school, the less motivated they become. Gallup’s recent survey showed student engagement going from 80 percent in fifth grade to 40 percent in high school. More than a century ago, we ‘reinvented’ the one-room schoolhouse and created factory schools for the industrial economy. Reimagining schools for the 21st-century must be our highest priority. We need to focus more on teaching the skill and will to learn and to make a difference and bring the three most powerful ingredients of intrinsic motivation into the classroom: play, passion and purpose.”

No less a figure than the President of Princeton University, Shirley Tilghman, one of the nation's leading molecular biologists, has dispelled the myth that, as President Obama said, "we need more scientists; we need more engineers". In fact there is a surplus of scientists and engineers contrary to the conventional wisdom. PhD postdocs are piling up working in universities at low wages because that can't get hired in regular university positions as professors.

Tens of thousands of PhDs are stuck in postdoc purgatory. They work basically as temp labor for professors. They work 60 to 80 hours a week at a salary that averages $8 to $12 an hour. Dr. Tilghman says she can't recommend the scientific life to Princeton undergraduates when their prospect for having a decent middle class life will take till they're in their late 30s at least. Most of the smart ones abandon their science PhDs and go on to medical school or Wall Street.

There's been a huge increase in the number of PhDs being turned out but faculty positions are remaining quite flat says Paula Stephan, an economist at Georgia State University. 25,000 PhDs a year are graduated in science and engineering, and the system can't absorb them. The system is pumping out more and more PhDs who are going into postdoc limbo because the amount of Federal funding has been flat. There are hundreds of applicants for a single position. Too many PhDs are chasing too few jobs says Dan Rather.

Aaron T Dossey, PhD, is working on experiments to help feed malnourished children around the world. He's doing his groundbreaking research from the kitchen of his one bedroom apartment. He's an unemployed entrepreneur hoping that his work will eventually land him a job. After 6 years and 3 postdocs, he not only has not landed a full time job, he is becoming less marketable as time goes on. Notwithstanding the fact that he received a grant from the Bill and Melinda Gates Foundation for $100,000. he is still running out of money, working part time at Home Depot and living off his savings. He eats his meals off the 99 cent menu at fast food restaurants. When he runs out of money, he'll probably move back in with his family. He's 35 now and he's contemplating the fact that his research career may soon be over.

When asked if there were too many scientists for too few jobs, Princeton President Tilghman said unequivocally, "Yes." Many of these students are very idealistic and gifted. They've bought the proposition hook, line and sinker that, if they only work hard, they will some day be in a position to make a contribution to society and be rewarded for it. The truth is that there is a logjam of PhDs as well as MSs, BSs, and BAs and, rather than hanging around as postdocs into their forties, they are going into real estate, law, medicine or cab driving. It goes without saying that the students of today should size up their eventual prospects before they dedicate ten or twenty years of their life to a pursuit that goes nowhere.

Because of the obvious drawbacks of following a myth that says a college education always pays off, I wrote a blog some years ago giving ten reasons not to go to college. I think it applies more than ever today. The first thing is that it's ridiculous to go deeply into debt without even the guarantee of a job. My strategy would be to learn a trade while in high school with which one could always at least pay the bills, and then pursue other goals whether in terms of education or in terms of entrepreneurship or in terms of enjoyment of life on the side rather than betting the farm on the fact of procuring a good job after so many years in college and a piece of paper that says you've graduated from such and such an institution.

One of the things that could alleviate the PhD logjam would be to create a space for independent scholars such as Aaron Dossey. He had a good approach. Work out of your home if you can't get set up properly in a lab. If only he could have gotten a string of those $100,000. grants, he could have continued to do it.

March 08, 2013

The American mythology that getting a good job requires a college degree is turning out to be a hollow promise, a mythology devoid of any connection to reality. Today's college graduates are being weighed down with tens of thousands of dollars in student loan debt, and many of them are either unemployed or working in jobs that don't require a college degree. A recent study has shown that half of recent college graduates can't find jobs. Those who graduated since 2009 are three times more likely to not have found a full-time job than those from the classes of 2006 through 2008. Of those who did find a job, the study indicates that 43 percent had jobs that didn't require a college degree. Sure the top 10% will get jobs right out of college, but for everyone else disappointment in the job search abounds. Even recent PhDs are facing stiff competition for fewer available jobs, and many of them end up driving taxis for a living.

At the same time that college graduates are not finding work, there are 3.7 million job openings, but these are the kinds of jobs college graduates aren't equipped to do. They require technical or vocational school training not the sitting in class and passing tests experience of most college graduates. As President Obama mentioned in his State of the Union speech, Germany prepares high school graduates with the training necessary to get an actual job instead of directing everyone to go to college. High school graduates in Germany have the equivalent of a techniocal degree from an American community college.

Despite the fact that Microsoft founder Bill Gates is a college dropout, Apple's founder Steve Jobs was a college dropout and Facebook's founder Mark Zuckerberg is a college dropout (all became billionaires by the way), Americans have been sold a bill of goods that a college degree is necessaary for the good life. This hasn't panned out for Serena Whitecotton however. Since graduating last May with a grade-point average of 3.5, experience working at her school newspaper and a degree in communications from California State University at Fullerton, Whitecotton said she has applied for more than 400 journalism and public relations jobs. For her efforts, she has been granted 10 interviews that haven't led to a single job offer. She still lives at home and has been unable to find work since her internship ended in November.

America has set up a class system whereby you are a second class citizen if you don't graduate from college. Increasingly though the reality is that there is not much of a connection between a college degree and finding a good job, and American high schools are not preparing high school graduates for entering the work force directly after high school. In a recent Dan Rather report about the German job machine, Rather interviewed young German workers and asked them if they had any regrets about not going to college. One young German girl said no, her job was so interestimg that she could not imagine going to university and sitting in a class all day. "It would be too boring for me." The fact of the matter is that the American educational system graduates students who have the capacity for sitting there and being bored without complaining for years on end. They are capable test takers, but in many cases the material is soon forgotten after the test is taken. They graduate with few if any practical skills and no practical experience. German youth on the other hand can work half time in industry earning money and getting real world practical experience. And it doesn't limit them if they want to go back to school later on and acquire more credentials and degrees.

The myth that with a college education you will be able to get a good paying job is being laid to rest. The social contract that, if you work hard, play by the rules and graduate college, there will be a job waiting for you is just a myth. Nowhere in the Constitution does it say anything about guaranteeing college graduates a job. That would be a social contract, and there ain't no social contract.

The Bureau of Labor Statistics projects that for the top ten fastest growing occupations for the years 2010 - 2020, only two will require a college degree. Four don't even require a high school diploma! Two require an Associate's Degree. Jeff Faux in his book, "The Servant Economy," explains why he believes politicians of both parties working for America’s elite are systematically destroying the economic aspirations and quality of life for America’s middle class.

Jeff Faux: "The future — you walk into an Apple store and you think you’re looking at the future, and you are, but it’s not in the technology. It’s in all of those smart college educated kids with the T-shirts on who are working as retail clerks at $12 an hour or so. Now if you talk to them, they will say, well, I’m just here temporarily." But they may still be there well into their 30s. That's what's happening. When you consider the BLS projections about the jobs of the future, you realize that many of these kids, these 20-something’s thinking that they’re going to be on a professional track, are going to be 30-something’s with dead end jobs well into the future. The BLS projections give the lie to the much repeated myth that with a college education you will make more over your lifetime than you will with just a high school diploma. Heck, where the jobs really are is for people without even a high school diploma. And the kids coming out of college that can't find jobs, that is the non-elite kids from non-elite colleges, they are loaded down with student loan debt. They wind up in a dead end job barely able to make their payments to Bank of America and Wells Fargo.

For profit colleges are advertising on TV trying to reinforce on impressionable minds that you aren't worth nothing without a college degree. And they will see to it that you are loaned as much money as you want with the consequence that whether or not you graduate with questionable skills, you will end up being indebted to Wall Street probably for the rest of your life, and that's even before you get a mortgage if indeed that were even possible with so much student loan debt. They are reinforcing the American meme that college graduates will make much more in their lifetime than those with only a high school diploma. Those dubious statistics may have been true in the past but recent statistics suggest otherwise.

Dr. Robert Schwartz, a professor in the Harvard graduate school of education, says that youth unemployment rates in Germany are half those in the US. The German system gets young people through high school with skills and credentials that allow them to get to work immediately. Schwartz doesn't believe the mythology that everyone needs to go to a four year college in order to have a fair shot at the American dream. Today's recent college graduates, instead of achieving the American Dream, are graduating into a hellish American dystopia of student loan debt, no job except one perhaps that didn't require a college degree and resentment at having been led down the garden path to nowhere.

Schwartz believes the educational system should be focused on helping young people make smarter choices about what they study and to make those choices with one eye on where the economy is going and whether or not the skills that they are acquiring actually have value in the labor market. 25% of 25 year old college graduates are working in jobs that don't even require a four year degree. They could have gotten those jobs without even going to college. They were sold a bill of goods, and they and their parents have been snookered by the educational system which has effectively lobbied the public to make people feel inferior if they don't have a college degree.

In San Diego wealthy La Jollans recently shot down a plan by the San Diego Unified School District to include more career and technical education in the curriculum. They thought it would detract from their college bound progeny.

"Take what happened this March in La Jolla, Calif. Parents rose in protest after the San Diego Unified School District proposed new high school graduation requirements mandating two years of career and technical education courses—or two to four courses. The district would have been the first in the nation to have such a mandate, experts believe. Parents circulated an online protest petition and school officials spent hours in a meeting to assure hundreds of parents that courses like computerized accounting, child development and website design could be in the best interest of all students.

"But afterwards, when parent leaders asked the crowd who favored the requirement, every single parent at the meeting voted against it.

...

"The parents, though, argued that college-bound students wouldn't be helped by taking career and technical education classes. As one parent wrote on an online petition that garnered 1,326 signatures in 21 days: "If you force the children of … highly intelligent and very academic parents to take less-rigorous VoTech coursework, you will hurt their chances of admission to undergrad and grad school.""

Recent studies have shown that people with two year technical degrees are starting to outearn four year college graduates. In the Florida class of 2009 those with two year technical degrees are outearning the average BA holder by $10,000. Nationally, roughly a third of those with two year technical degrees are outearning the average four year degree holder. The US needs to create some alternatives for young people other then going to college. One person in four drops out of high school and the biggest reason they give is that it was boring sitting in classrooms all day and there was no connection with the real world.

The educational system should help young people get over the hump of high school and get launched into the world of work thus helping them go from adolescence to adulthood. There are some programs starting up, for example at Greenville Technical College, where young people can combine school with on the job work experience and a paycheck so that after two years they have a degree, work experience and have earned a living. They can step right into a full time job. Later on if they so desire they can go on to further their academic experience and earn more credentials and skills.

February 25, 2013

The unemployment rate is 7.8%. Both parties agree that this is too high, but they propose totally different solutions to create more jobs. The Republican solution is to give more tax breaks and other advantages to the rich and to corporations because they are the job creators. Really? Then why haven't they created more jobs in the last 30 years. This historical experiment of "trickle down" economics has been tried since the time of Ronald Reagan and it has proven to be an abject failure. Yet Republicans are still pushing it as the solution to all our problems.

Esteemed Nobel laureate and Princeton professor Paul Krugman wants to take the traditional Keynesian approach and do deficit spending to improve the economy. He says there's no reason to worry about the deficit since the US can borrow money at extremely low rates. Not to worry. He sides with Dick Cheney who famously said, "Deficits don't matter." He and Bush then went on to add trillions to the national debt by fighting two unpaid for wars, tax breaks for the rich and an unpaid for prescription drug benefit for seniors that was in reality a giveaway to the pharmaceutical companies. But now that a Democratic President is in office, Republicans are all worried about deficits. They should have been worried when George W Bush was doing the profligate spending.

However, I disagree with both Cheney and Krugman. Deficits do matter and here's why. Sure the government can borrow a lot of money, as much as it wants to, at extremely low rates. But the government has to pay interest on the national debt and that is a growing part of the budget. Interest on the debt is the fourth largest government expenditure after Defense, Medicare and Medicaid. In 2011 Federal, state and local governments spent $454,393,280,417.03 on interest. It actually came down dramatically in 2012 to $359,796,008,919.49. That's still a lot of money. The Federal government alone spent around $220 billion in net interest on its debt in 2012, and is predicted to spend over a trillion dollars in interest by 2020. That's $1 trillion we can't spend to educate our kids or to replace our badly worn-out infrastructure.

And there's no guarantee that interest rates will continue to remain at historical lows. They are being held there right now by the Federal Reserve's policy of quantitative easing. The Fed is printing money at the rate of $85 billion a month. This money is being essentially given to the large Wall Street banks. Theoretically it's being loaned, but if someone loans you money at a zero interest rate, why would you ever pay it back? It's foolish to think that interest rates will always remain this low and that foreign nations and individuals will continue to loan us money ad infinitum.

The Fed's policy of printing money and then giving it to the big banks relies on the theory that low interest rates will get the economy moving again. The theory goes that people will be attracted to the low interest rates, borrow money and consume. It assumes that banks will actually loan out the money. Since consumption is 70% of the US economy, GDP will increase and that will create more jobs. In other words the Fed is exercising the same trickle down theory of economic growth made famous by Ronald Reagan and that has been tried for the last 30 years and failed. The Fed is essentially devaluing American currency in the hopes that this will create jobs. And it has been a big failure insofar as job creation is concerned but it has kept the US government's borrowing rates low.

So if both deficit reduction and job creation are important, how do you do both. Put simply the US government has to walk and chew gum at the same time. The Republican emphasis on cutting spending, especially spending on social programs, would lead to austerity and that would contract the economy even more. So that isn't the solution. To be fair President Obama has not been on the side of deficit spending as a way to get the economy out of the doldrums. He has been for a balanced approach of stimulating the economy and paying down the deficit. But Paul Krugman and many Democratic theorists like Robert Reich have.

The trick is to note that government spending does not have to be deficit spending. Government spending can increase without incurring greater deficits by increasing government revenues. And there are different varieties of government spending. Republicans favor just giving government money to private corporations and having them do the job. Their policy is to let the government just be a money conduit from taxpayers to corporations. Alternatively, government can spend money directly on jobs programs like rebuilding infrastructure. Instead of using the indirect approach which amounts to pushing on a string which is what the Fed is doing and which Republicans advocate, the government can actually create jobs directly in the public sector. If you want to create jobs, why not just create jobs directly instead of trying to get the private sector to create jobs. President Obama should just get up and say, "We've tried various policies to get the private sector to create jobs; they haven't worked so now the government, the public sector, is going to create jobs directly."

But here's where Democrats and President Obama have a problem. Instead of calling for more revenue by taxing the rich and corporations and government direct spending instead of spending to fund private corporations to rebuild infrastructure, Obama is reticent because he is afraid of being labeled a socialist. No worries, he's already been labeled a socialist despite his administration's being the most pro-business administration in years. And beware of the public/private partnership which is just another variation of the privatization of functions which the government can do more efficiently. We don't want to replace the military-industrial complex with an infrastructure-industrial complex replete with lobbyists, cost plus contracts and highly paid CEOs. There's no need for Wall Street to get involved.

Well, where is the money going to come from? Senator Bernie Sanders has an answer: End Offshore Tax Havens. One out of four profitable corporations pays nothing in taxes. Tax rates on profits are the lowest since 1972. Last year Facebook paid nothing despite having a billion dollars in profits. Government revenue as a percentage of GDP is lower than at any time in history. Corporate contributions to tax revenue are the lowest of any major country on earth. It is absurd for major corporations to stash huge amounts of money in countries like the Cayman Islands which have a zero tax rate.

Bernie Sanders and Jan Schakowsky have introduced the Corporate Tax Fairness Act. The bill will raise $590 billion over the next decade. The bill will also stop giving tax breaks to corporations for shipping jobs overseas. Their bill would prevent oil companies from disguising royalty payments to foreign countries as taxes in order to reduce their taxes in the US among other things. And it has a snowball's chance in hell of passing. A financial transaction tax would bring in as much as $100 billion annually. We used to have one; Europe just recently enacted one. Let's end the "carried interest" loophole for hedge and private equity funds. Wall Street needs to start paying its fair share.

Corporations have been getting away with murder in not paying their fair share of taxes. This is from an article by Bernie Sanders:

"In 2010, Bank of America set up more than 200 subsidiaries in the Cayman Islands (which has a corporate tax rate of 0.0 percent) to avoid paying U.S. taxes. It worked. Not only did Bank of America pay nothing in federal income taxes, but it received a rebate from the IRS worth $1.9 billion that year. They are not alone. In 2010, JP Morgan Chase operated 83 subsidiaries incorporated in offshore tax havens to avoid paying some $4.9 billion in U.S. taxes. That same year Goldman Sachs operated 39 subsidiaries in offshore tax havens to avoid an estimated $3.3 billion in U.S. taxes. Citigroup has paid no federal income taxes for the last four years after receiving a total of $2.5 trillion in financial assistance from the Federal Reserve during the financial crisis."

The sad fact is that the private sector is not in the process of creating jobs but of destroying jobs through automation and robotics. Almost anything a human being might have done in a job is now being done by robots. Some say that this creates jobs for "knowledge workers." Sure if you're among the upper 1% in knowledge talent. Companies like Microsoft, Google, Apple and Facebook are not looking for the average college graduate. They're looking for the upper 1% of college graduates. Together they employ less than 200,000 people in the US. The top talent in every field are making good money. Everyone else is going downhill if they're employed at all. 50% of college graduates are either unemployed or underemployed in terms of their qualifications. In the 2009-2010 recovery, 93% of the gains in income went to the top 1%.

Why should the private sector create jobs if they can get a robot to do the work 24 hours a day at a cost of less than $5.00 an hour? If the private sector will not create jobs, that leaves the government to create jobs directly. Instead of pushing on a string with policies that are supposed to create jobs indirectly by encouraging the private sector to do so, government should get more involved. More government revenues plus direct job creation rebuilding infrastructure could result in growing the economy, providing good middle class jobs and paying down the debt.

Chrystia Freeman in her book Plutocracy explains this phenomenon which results in the divergence of jobs and income, creating a well to do upper 1% class and everybody else:

"This is what ecomomists call the "superstar" effect - the tendency of both technological change and globalization to create winner-take-all economic tournaments in many sectors and companies, where being the most successful in your field delivers huge rewards, but coming in second place, and certainly in fifth or tenth, has much less economic value."

We are seeing the effects of a meritocracy where the top 1% of talent merges with the top 1% in terms of income and wealth. This is great for the top 1% of graduates from elite colleges but not so much for the average graduates of average colleges with $100,000. in student loan debt and a job at Starbucks instead of a career type job in their field. In every field the chasm between the superstars and everyone else is getting bigger and bigger. Inequality increases with the acceleration of meritocracy. Meritocracy and plutocracy converge creating a democratic dystopia.

That's why the government has to step in to regulate this runaway dystopia. Taxes on corporations and the rich need to be increased in order to tamp down inequality. This revenue needs to be redistributed to the former middle class in terms of job programs. It could be redistributed in terms of welfare and unemployment insurance, but this creates a class of dependents. It would be much better to create a middle class of workers rebuilding infrastructure. And this is not a trivial job. The American Society of Civil Engineers estimates that there is $2 trillion worth of work that needs to be done just to bring roads, bridges and other basic infrastructure up to par. But there is more to infrastructure than just that. When you consider all that needs to be done to prevent and combat the changes due to global warming, there is enough potential work out there to fully employ US workers for generations. Utilities need to be hardened and undergrounded. Fossil fuel powered electric plants need to be converted to solar and wind. Buildings need to be made less energy consuming. High speed rail needs to be implemented. Housing needs to be moved back from the shorelines.

There is no lack of work that needs to be done, and this is work the private sector not only won't do but in many cases it is work that the private sector is lobbying against doing. They profit from using the atmosphere as a dump. It's crucial that the government prevent runaway wealth maldistribution, create jobs that the private sector has no incentive to create and save the planet from ecological disaster.

December 29, 2012

Well the New Year is upon us, and it's time to take stock and see if I can make any sense out of the goings on of the last year and the interaction of reality with my own mind. This is my crack at it.

1. I believe that gun ownership should be a privilege and not a right. The 2nd Amendment was constucted to be similar to the Swiss model in which citizens formed a militia for national defense. There was no standing army. That was the original intent of the framers of the Constitution for exactly the same reason: there was no standing army. Today that rationale is not relevant. Even Switzerland has moved the guns from homes to depots to prevent what little gun violence takes place there.

I don't believe background checks and a database of those with mental problems will solve much. In almost every mass murder, the perpetrators had no prior record of mental health problems although in retrospect everyone agrees that there were mental health problems. In almost every case, the guns were obtained legally. That tells you something which is that it is the proliferation of military type weapons with high capacity magazines that is the problem. These guns should not only be made illegal, but they should be taken off the streets, that is, confiscated or gotten rid of with buyback programs.

Terrorists have only been able to kill 17 people in the US since 9/11, but 88,000 Americans have died in gun violence from 2003 to 2010. Britain, which has very strict gun laws, had 41 gun murders in 2010 while the US had around 10,000. 6,626 Americans have died in the wars in Iraq and Afghanistan. About 3000 died in the tragedy of 9/11. The cost of the wars in Iraq and Afghanistan so far is around $4 trillion. At the same time zero dollars have been spent on the war on gun violence in the US in which about the same number of people die every year as died on 9/11 plus Iraq and Afghanistan (Americans, that is). Does this make any sense? As Pogo said, "We have met the enemy and the enemy is us."

2. I believe there should be a floor on poverty and a ceiling on wealth. For most of the last decade, the percentage of Americans living below the poverty line increased each year, from 12.3 percent in 2006 to 15.1 percent in 2010. In 2011 the official poverty rate was 15 percent, meaning that 46.2 million people live below the poverty line. The Walton family has more wealth than the lower 40% of the American population combined while workers at Wal-Mart subsist on wages so low that they need to supplement their incomes with food stamps and other social services driving up the cost of government.

Much of the wealth that the upper 1% possesses is used to distrort the political system and was gained fraudulently by those in the financial sector. I wrote this in 2010 on Will Blog For Food:

"Hedge Fund manager John Paulson helped to design the Abacus fund for Goldman Sachs and filled it with a bunch of garbage. This fund was then peddled to unwary investors while Paulson shorted it. As a result, when the garbage in the fund went south, the investors lost $1 billion and Paulson's gamble netted him $3.7 billion. But that isn't even the worst of it. Taxpayers who bailed out the system actually paid Paulson the $3.7 billion - as if he needed it."

John Paulson hasn't been prosecuted for this fraudulent investment scheme and paid taxes on his income at the "carried interest" rate of 15% just like his fellow private equity fund manager, Mitt Romney. He has used some of his ill gotten gains to contribute to conservative causes as has billionaire Sheldon Adelson who has made his money off of seniors gambling away their social security checks.

I don't think anyone needs an income of more than $10 million a year, and a family of four needs an income of at least $40 thousand. These would be my recommended limits, for what they're worth, for the ceiling on wealth and the floor on poverty. Remember anyone earning an income of $10 million is going to store much of that as accumulated wealth which is going to provide a certain percentage return on investment (ROI in plutocrat speak) as unearned income each following year in addition to the $10 million earned (yeah, sure) income.

3. I believe that global warming is happening right now and is a result of human beings polluting the atmosphere with carbon emissions. As the saying goes "Don't shit where you eat" and we are shitting on Mother Earth. Future generations are going to have to eat and breathe here. Europeans and native Americans settled this continent without sending massive amounts of carbon into the atmosphere. We're going to have to relearn how to do the same, and there is not much time to waste without suffering the consequences that we're already starting to suffer.

As the number of billion dollar weather events starts to pile up, we will soon run out of money. We need to divert money from the bloated and wasteful military-industrial complex and spend it on infrastructure redevelopment in order to counteract and protect ourselves from the devastating aftermaths of extreme weather events like SuperStorm Sandy and SuperTyphoon Bopha. As I previously said, we have spent trillions to avenge the deaths of approximately 3000 people while spending hardly anything on gun control or infrastructure hardening. Both of the latter are bigger threats to American security than are the handful of self-proclaimed Al-Quaeda terrorists who have done a trivial amount of damage to the US since 9/11. Yet we spend trillions of dollars on them which mainly goes into the coffers of corrupt politicians and defense contractors. Not to mention the millions of civilians we have killed in Iraq and Afghanistan which guarantees a future generation of terrorists bent on avenging those deaths.

4. I don't believe that good middle class jobs are coming back as we recover from the Great Recession. They were disappearing long before the Great Recession hit. The combination of automating and computerizing manufacturing processes combined with the outsourcing of menial labor combined with the deunionization of the country means that we shouldn't sit around and hold our collective breaths expecting that everyone who has lost a good middle class job is going to get one back as we recover from recession and the unemployment rate gets down to 5%. The jobs that are being created are for the most part minimum wage service sector jobs. Even so-called full employment, if we achieve it, will consist in large part of those kinds of jobs. So what good is full employment as a measure of anything or a goal?

The so-called job creators are really job destroyers and they know that. They are just laughing up their sleeves as they automate and outsource thereby slashing the cost of production and increasing profits while at the same time calling for lower taxes on themselves on the grounds that they are job creators. This makes Wall Street very happy and top management is handsomely rewarded for doing this. As CEO pay soars, jobs are either outsourced or subcontracted to temp agencies who hire non-full time workers at minimal wages to do the heavy lifting. By this means the major corporations take no responsibility for low wages. It's somebody else, a sub-contractor, that's paying the low wages, not them. And a college education is no panacea. Middle aged college degreed folks are being let go, laid off and downsized never to be rehired again. A good job right out of college is no guarantee of continued employment as you become technologically obsolete in about 10 years.

What's the solution? I believe that self-employment is a big part of it. When you are employed by a corporation, you are vulnerable to being laid off for any reason at any time. When you're self employed, you can never be laid off. It may be too late for a lot of people, but young people coming up in school, even those college bound, should learn a trade while in high school that they can fall back on if need be. Most trades that serve the local community cannot and will not be outsourced and are amenable to self employment. The college educated crowd needs to think about what occupations and professions allow them to be self employed and which only allow them to be employees of some corporation. And most corporations don't want you if you've been laid off after the age of 50 when you are most vulnerable and desperately need a job.

I also believe that government has to be the employer of last resort. Corporations are in the business of outsourcing and creating temp jobs. Even startups usually only need employees until they really get rolling, go public and get obsessed with their stock price which means they need to reduce the cost of labor. At that point the job creators seek to creatively destroy American jobs and pocket increased profits.

Well, folks, there you have it in a nutshell. These are some of the topics I will be writing about in 2013. I also like to bring in the San Diego connection as what's happening in the wider world is also very definitely happening here as well. As far as our political system is concerned, my prediction is that Republicans in Congress will obstruct any meaningful legislation whatsoever and put a halt to any initiative President Obama wants to make. Better hope that 2014 brings a return to majorities in both the House and Senate for Democrats and that Obama can manage to get something constructive done for the good of the country in his last two years in office.

December 07, 2012

Today’s jobs report shows an economy that’s still moving in the right direction but way too slowly, which is why Washington’s continuing obsession with the federal budget deficit is insane. Jobs and growth must come first.

The cost of borrowing is so low — the yield on the ten-year Treasury is near historic lows — and the need for more jobs and better wages so high, and our infrastructure so neglected, that a reasonable government would borrow more to put more Americans to work rebuilding the nation.

Yes, unemployment is down slightly and 146,000 new jobs were created in November. That’s some progress. But don’t be overwhelmed by the hype coming out of Wall Street and the White House, both of which would like the public to believe things are going quite well.

The fact is some 350,000 more people stopped looking for jobs in November, and the percent of the working-age population currently employed continues to drop — now at 63.6%, almost the lowest in 30 years. Meanwhile, the average workweek is stuck at 34.4 hours.

The slowness of the jobs recovery isn’t because of Hurricane Sandy, which it turns out had very little impact on November’s job numbers (the hurricane’s negative effects were more than offset by a Thanksgiving earlier than normal, and an early start to the Christmas buying season). And it’s not because of any uncertainty over the looming “fiscal cliff.” Most consumers in November remained oblivious about any pending cliff.

The reason the economy is still under-performing is overall demand is inadequate. Businesses won’t create more jobs without enough customers. But consumers can’t and won’t spend because they don’t have the money. Unless or until the private sector — businesses and consumers — are able to boost the economy, government must be the spender of last resort.

But the nation has bought into the Republican frame of thinking that we have to “get our fiscal house in order” before the economy can get back on track. Although Barack Obama was reelected and Democrats gained seats in the House and Senate, that frame is still dominating debate.

And even though we’re near a fiscal cliff that illustrates how dangerous deficit reduction can be when so many people are still unemployed, the White House and the Democrats seem incapable of changing the frame of debate.

But remember: Jobs must come first. Job creation must be our first priority

October 20, 2012

Jobs in the US are undergoing a huge transformation. People are being laid off from good paying jobs with benefits, and, to the extent they are finding new ones, they are being paid about half what they were at their previous job with no benefits. Most of the newly created jobs in the "promising" recent jobs report were part time or temporary jobs. The September Bureau of Labor Statistics (BLS) jobs report indicated that 114,000 jobs were added in September and that the unemployment rate dipped to 7.8%. This is good news to be sure, but the fact remains that the issue is more about the quality of jobs added than the actual number.

Half of all college graduates are not able to find work. The good jobs out there are only for elite students from elite institutions. Half of all graduates including graduates in science and engineering from universities like Harvard and Duke are going to work on Wall Street. This is where the top talent is going, and they're making big bucks - six figures to start plus signing bonuses. If you are just an average college student though from a run of the mill college, chances are the only job you will find is as a barrista at Starbucks or at the Apple genius bar. The Microsofts, Qualcomms, Googles and Intels are only hiring the top 1% or 2% from elite colleges.

The myth that with a college education you will be able to get a good paying job is being laid to rest. The social contract that, if you work hard, play by the rules and graduate college, there will be a job waiting for you is just a myth. Nowhere in the Constitution does it say anything about guaranteeing college graduates a job. That would be a social contract, and there ain't no social contract.

The Bureau of Labor Statistics projects that for the top ten fastest growing occupations for the years 2010 - 2020, only two will require a college degree. Four don't even require a high school diploma! Two require an Associate's Degree. Jeff Faux in his book, "The Servant Economy," explains why he believes politicians of both parties working for America’s elite are systematically destroying the economic aspirations and quality of life for America’s middle class.

Jeff Faux: "The future — you walk into an Apple store and you think you’re looking at the future, and you are, but it’s not in the technology. It’s in all of those smart college educated kids with the T-shirts on who are working as retail clerks at $12 an hour or so. Now if you talk to them, they will say, well, I’m just here temporarily." But they may still be there well into their 30s. That's what's happening. When you consider the BLS projections about the jobs of the future, you realize that many of these kids, these 20-something’s thinking that they’re going to be on a professional track, are going to be 30-something’s with dead end jobs well into the future. The BLS projections give the lie to the much repeated myth that with a college education you will make more over your lifetime than you will with just a high school diploma. Heck, where the jobs really are is for people without even a high school diploma. And the kids coming out of college that can't find jobs, that is the non-elite kids from non-elite colleges, they are loaded down with student loan debt. They wind up in a dead end job barely able to make their payments to Bank of America and Wells Fargo.

The fact is that corporations are robotizing, computerizing and automating most aspects of most jobs. The kind of work that can't be robotized is outsourced to sweatshop workers in Asian contries where workers slave away for less than a dollar an hour. This is mostly assembly work. For instance, the Apple iPhone is a sophisticated device most of whose parts are manufactured by robots. However, they haven't figured out a way to have robots do the final assembly. So the iPhones are assembled by hand by Foxconn workers in China. These corporations, like Apple, however, are working on robots that will even do this bit of final menial assembly work. At that point they will not even need the sweatshop workers. That is the final goal: a product that can be entirely produced from start to shrink wrap by an automated assembly line without the need for human intervention.

This "hollowing out" of the US economy is nothing new. It didn't just start with the Great Recession of 2008. This is a trend that has been going on for 30 years or more. The first shot fired was Reagan's firing of the unionized PATCO workers. The gradual demise of the unions combined with the globalization of the work force has resulted in the reduction of the status of American workers to the point that the middle class is doing a disappearing act. Some economists would argue that, as the work force is becoming more productive, workers should share in those productivity gains. But its not that the work force is becoming more productive, the robots are becoming more productive. Capital itself in the form of robots is becoming more productive replacing the need for workers altogether. So to the extent that workers are necessary in the production process at all, it's not that they in and of themselves are becoming more productive. It's that less human work is required for the same amount of output due to the fact that robots are doing most of the work. In any event the non-unionized work force doesn't have the power to demand wage increases tied to increases in productivity.

Rana Foroohar in a Time article entitled "More Jobs, Less Pay," says: "Corporate profits are at record highs... and companies are buying plenty of cool new technology. The problem is that they are using it to replace human workers everywhere, with software eliminating white collar administrative jobs and robots getting Chinese factory gigs. ...

"The upshot: while technology is still doing a good job of displacing workers, it's not creating the kinds of megashifts in productivity and income growth that allow for major increases in standards of living."

Service sector jobs have by and large replaced manufacturing jobs and temporary and part time jobs have replaced full time jobs with benefits. Most large employers in the service sector manage their workforce as if their workers didn't depend on their jobs for anything essential like rent or child support. Most Wal-Mart workers are on food stamps. These are great jobs for people who don't really need them to pay their bills. In "No Logo," a book published in 2000 well before the Great Recession, Naomi Klein says: "And so the mall and the superstore have given birth to a ballooning category of joke jobs - the frozen-yogurt jerk, the Orange Julius juicer, the Gap greeter, the Prozac-happy Wal-Mart 'sales associate' - that are notoriously unstable, low-paying and overwhelmingly part-time."

She goes on: "Never mind that the service sector is now filled with workers that have multiple university degrees [and student loan debt], ... laid-off nurses and teachers, and down-sized middle managers. Never mind, too, that that the students who do work in retail and fast food - as many of them do - are facing higher tuition costs, less financial assistance from parents and government and more years in school." Many of these workers who consider their positions temporary, until they can find a real job in their field, end up with a de facto career in a job that doesn't even require a university degree and at wages that can't really support a middle class life.

Instead of entering the "servant economy" where job applicants are expected to conduct themselves in a servile manner, those who are able would be better off creating their own jobs instead of expecting that a university degree will be their ticket to a stable long-term, well-paying job. They should, if possible, be their own "job creators" instead of expecting that the so-called job creators, whose only real interest is in reducing the number of jobs and increasing automation and offshoring, will do it for them. One who creates his or her own job does not necessarily have to be an "entrepreneur," one who comes up with the next "Big Thing." There are plenty of self-created jobs in well established fields which require little if any credentialization. For instance, trades such as carpentry, plumbing, electrical work, handyman, gardening/landscaping, these are jobs which one can create for oneself with little capital investment required. Windowcleaning is a profession that doesn't even require a contractor's license or any formal training in the state of California and hardly any capital investment. I should know: I've been one for 36 years.

And in a country that espouses freedom, one cannot really be free working in a servant economy where in essence one must bow down to your boss or supervisor. That's not really being free. There is no freedom like being self-employed, and earning your living from multiple sources and a large customer base. That way no one customer has any power over you. No one can order you around. Only then are you truly free, and you can tell the so-called "job creators" to go to hell. It really is exhilarating.

October 02, 2012

Getting a college degree has become part of the mythology of the American Dream. But when you consider the load of student loan debt that most students have to take on today, instead of blindly following the dictates of the American Dream, it is prudent to stop and ask ourselves if we really will be better off when that diploma comes laden with a ton of debt. In this article we do a cost benefit analysis of the worth of a college degree. We challenege the conventional wisdom that with a college degree you will be better off in the long run. For one thing that debt can never be discharged in bankruptcy. It will follow you the rest of your life. Even social security checks can be garnished to pay it. Student loan debt has more than quintupled since 1999. Earlier this year American collective student loan debt passed the one trillion dollar mark, more than the nation's collective credit card debt.

More than half of all recent graduates are either unemployed or working in jobs that don't require a college diploma. There is a surfeit of college degrees to the extent that they are being required for the most casual jobs just because employers can afford to be choosy, not that the job has anything remotely to do with the training received in college. According to Ohio University economics professor Richard Vedder, "Employers seeing a surplus of college graduates and looking to fill jobs are just tacking on that requirement. De facto, a college degree becomes a job requirement for becoming a bartender." Or a barrista. In a study by Richard Arum and Josipa Roksa, entitledAcademically Adrift, the authors find that at least a third of students gain no measurable skills during their four years in college. Furthermore, for the rest their increase in knowledge is minimal.

So what is the point of a college degree? The heart of the matter is that what going to college is really all about is not gaining an education but gaining a credential. That credential tells a prospective employer that the holder was smart enough to get into college, enough of a conformist to put up with all the bullshit, and compliant enough to sit there for four years. Presumably, he or she would make a docile and compliant employee and a docile and compliant consumer, in other words, a good American living the American Dream. But for many the American Dream has become the American Nightmare. For many the dream of living independently goes by the wayside and they have to move back into their parents' house. For many their payments on their student loans take up most of their meager paychecks, and late payments, forebearances and defaults double and triple the amount owed.

Let's consider for a moment the "statistics" that maintain you are always better off with a college diploma. Who gathers these statistics? Why it's people who have a vested interest in recruiting college students, think tanks connected to colleges themselves. And as anyone with a little savvy knows, you can lie with statistics. The college-industrial complex is heavily invested in having you believe that you will make more money over a lifetime with a college diploma than you will with just a high school diploma. Problem is they never include in their statistics the likes of college dropouts like Bill Gates. In fact four of the five wealthiest Americans are college dropouts. In addition to Bill Gates, there are fellow billionaires Michael Dell who dropped out of University of Texas, Larry Ellison who dropped out of two colleges and Microsoft co-founder Paul Allen who dropped out of University of Washington. Did we forget to mention Apple co-founder Steve Jobs who dropped out of Reed College? If these guys had been included in the statistics, the results would have been different for sure. They would have skewed the statistics to show that college dropouts made the most money and acquired the most wealth over the course of a lifetime. Furthermore, these guys are in high tech fields, the knowledge for which was not garnered in college!

And what people with just high school diplomas are being included in the statistical studies? It's surely not enough to just graduate from high school with some generic diploma and say, "Here I am on the job market. What you got for me?" No, but those who use their high school years to acquire useful skills and to set their sights on useful careers are way ahead of the game. People like this are probably not included in the statistical studies either. I know of a high school dropout from my home town who set up an auto body repair shop and is now a millionaire. There is no reason why a self-employed person using skills developed within and outside of high school during high school years can't be successfully self-employed. Then the college diploma which at best is only a ticket of admisssion to a corporate job is completely unnecessary. And one is not at the beck and call of one's employer. You don't have to bow and scrape and kiss your employer's ass. Or worry about being laid off!

So what college is really about is credentialization. If you want to be an employee you have to have a credential to please your employer. If you aim towards self-employment, you can not only make more money in the long run, you don't have to kiss your employer's ass. You are truly independent. In my article "10 Reasons Not To Go To College" I write about the fact that kids are finding out today that a college diploma does not guarantee you a job. There are many PhDs out there who are driving cabs. And you can be laid off, downsized, outsourced at any time. How much job security is in that? A case could be made that money spent on a college education could be better spent buying a business or investing in real estate. Then you're in a position of building wealth not just simply being immersed in the debt culture of a mortgage, car payment, student loan debt and paying bills even if you have a job. And you have a four year head start over those who go to college! The American Dream of being a worker/consumer with debt up the ying-yang is replaced with the American Dream of real financial independence. You don't have to kiss up to your boss and hope that he won't be giving you a pink slip. As I said in the previous article:

"9. College trains you to be a docile and compliant employee. Is this how you want to live your life? As Caspar Milquetoast? The second you mouth off to your boss, you're history! Be a free and independent individual instead. Have a passion for what you do. Have real knowledge instead of a piece of paper that says you know something. Do real work instead of make work. Be willing to take the risk of starting your own business instead of the pseudo-security of being somebody else's employee. Then you don't have to take crap from anyone or kiss anybody's ass!"

Learning resources are readily available and mostly free. Libraries and the internet enable anyone to receive the equivalent of a college education and learn every possible skill. Khan Academy will teach you everything from math skills to the Greek debt. MIT Opencourseware allows you to take courses ranging from the humanities and the arts to architecture and engineering. Become an autodidact. You will learn a lot more if you study what you are interested in rather than what your professor wants to cram down your throat.

In a recent Newsweek article, Megan McArdle asks "Is College a Lousy Investment"? It is if, after sitting patiently in class for four years, you come out and the only job you can get is flipping burgers or are otherwise employed in the service economy. If, instead of becoming a professional, you have become a serf. Then you are forced to move back in with your parents and contemplate the huge monthly payment you have to make on your student loan. Forget about getting married, buying a house and raising kids. You are already saddled with a mortgage! Welcome to America's Screwed Generation.

August 01, 2012

Prominent economists have been expounding for months on the dire consequences of this country’s unemployment crisis. As recently as this May, Dean Baker and Ken Hassett exhorted us to pay vigilant attention. In an op-ed headlined “The Human Disaster,” they described unemployment as “nothing short of a national emergency.”

Still, the election discussion plods on with barely a nod to the criminal unemployment disaster.

For bracing relief, check out the latest from economist Robert Pollin, professor at the University of Massachusetts, Amherst. Pollin’s latest book, Back To Full Employment, lays out a roadmap to recovery that wouldn’t take a miracle. It wouldn’t even require a Democratic sweep this November; merely action by the Fed and a progressive movement worth its salt.

When world leader companies like Caterpillar Inc. are putting the squeeze on their workers despite accruing record-setting profits; when banks are hoarding $1.6 trillion, money is cheap and government borrowing costs are at their lowest in history, there’s simply no excusing existing levels of poverty, and the poverty-level wages currently prevailing in the not-so-United States.

There’s no excuse for 6 million people to be living on food stamps alone or for 103 million to be not getting by on wages that barely lift them above poverty (see Peter Edelman on this, if you don’t believe it). There’s no excuse, and there’s no point simply beating up on trade unions.

The world’s best president could roll back every last anti-organizing law and set organizers free to sign up every last employed American, and still the standing pool of desperate unemployed would drain worker power away. To expect otherwise is to wait for Batman.

Economists know how to maintain decently full employment. Coming out of the Great Depression, says Pollin, we had some basic tools. “To run an economy at a level of fundamental decency, you try to achieve full employment.” Neoliberalism, under Thatcher and Reagan, he says, “tossed it all away.”

The last time the US saw relatively full employment wasn’t in ancient history. It was at the end of the 1990s. We can do it. Pollin lays out how. What we need is a progressive movement with full employment at the spear-tip of its agenda.

Alexander Cockburn and Pollin discussed full employment in the Nation in 1987. It’s chilling how little has changed. You can read that article here [pdf]. A full transcript of my conversation with Pollin will appear in the next print edition of CounterPunch.

July 07, 2012

Bad news for the U.S. economy and for Barack Obama. We’re in the jobs doldrums. Unemployment for June is stuck at 8.2 percent, the same as in May. And only 80,000 new jobs were added.

Remember, 125,000 news jobs are needed just to keep up with the increase in the population of Americans who need jobs. That means the jobs situation continues to worsen.

The average of 75,000 new jobs created in April, May and June contrasts sharply with the 226,000 new jobs created in January, February and March.

In Ohio yesterday, Obama reiterated that he had inherited the worst economy since the Great Depression. That’s true. But the excuse is wearing thin. It’s his economy now, and most voters don’t care what he inherited.

In fact, a good case can be made that the economy is out of Obama’s hands — that the European debt crisis and the slowdown in China will have far more impact on the U.S. economy over the next four months than anything Obama could come up with, even if he had the votes.

It’s also out of the Fed’s hands. No matter how low the Fed keeps interest rates, it doesn’t matter between now and Election Day. Companies won’t borrow to expand if they don’t see enough consumers out there demanding their products. Consumers won’t spend if they’re worried about their jobs and paychecks. And consumers won’t borrow (or be able to borrow) if they don’t have the means.

Yet Obama must show he understands the depth and breadth of this crisis, and is prepared to do large and bold things to turn the economy around in his second term if and when he does have the votes in Congress. So far, his proposals are policy miniatures relative to the size of the problem.

The real political test comes after Labor Day. Before Labor Day, Americans aren’t really focused on the upcoming election. After Labor Day, they focus like a laser. If the economy is moving in the right direction then — if unemployment is dropping and jobs are increasing — Obama has a good chance of being reelected. If the jobs doldrums continue — or worse — he won’t be.

June 02, 2012

The White House must be telling itself there are still five months between now and Election Day, so the jobs picture could brighten. After all, we went through a similar mid-year slump in 2011 but came out fine.

But however you look at today’s jobs report, it’s a stunning reminder of how anemic the recovery has been – and how perilously close the nation is to falling into another recession.

Not only has the unemployment rate risen for the first time in almost a year, to 8.2 percent, but, more ominously, May’s payroll survey showed that employers created only 69,000 net new jobs. The Labor Department’s Bureau of Labor Statistics also revised its March and April reports downward. Only 96,000 new jobs have been created, on average, over the last three months.

Put this into perspective. Between December and February, the economy added an average of 252,000 jobs each month. To go from 252,000 to 96,000, on average, is a terrible slide. At least 125,000 jobs are needed a month merely to keep up with the growth in the working-age population available to work.

Face it: The jobs recovery has stalled.

What’s going on? Part of the problem is the rest of the world. Europe is in the throes of a debt crisis and spiraling toward recession. China and India are slowing. Developing nations such as Brazil, dependent on exports to China, are feeling the effects and they’re slowing as well. All this takes a toll on U.S. exports.

But a bigger part of the problem is right here in the United States, and it’s clearly on the demand side of the equation. Big companies are still sitting on a huge pile of cash. They won’t invest it in new jobs because American consumers aren’t buying enough to justify the risk and expense of doing so.

Yet American consumers don’t have the cash or the willingness to spend more. Not only are they worried about keeping their jobs, but their wages keep dropping. The median wage continues to slide, adjusted for inflation. Average hourly earnings in May were up 2 cents – an increase of 1.7 percent from this time last year – but that’s less than the rate of inflation. And the value of their home – their biggest asset by far – is still declining. The average workweek slipped to 34.4 hours in May.

Corporate profits are healthy largely because companies have found ways to keep payrolls down – substituting lower-paid contract workers, outsourcing abroad, using computers and new software applications. But that’s exactly the problem. In paring their payrolls, they’re paring their customers.

And we no longer have any means of making up for the shortfall in consumer demand. Federal stimulus spending is over. In fact, state and local governments continue to lay off large numbers. The government cut 13,000 jobs in May. Instead of a boost, government cuts have become a considerable drag on the rest of the economy.

Republicans will have a field day with today’s jobs report, taking it as a sign that Obama’s economic policies have failed and we need instead their brand of fiscal austerity combined with more tax cuts for the wealthy.

March 14, 2012

When I was a graduate student at UCSD in the midst of the anti-war movement, protesting the war in Vietnam, I went to the library and pondered what would make the world a better place, what could I do to contribute something that might make war less likely and peace time activity more likely. I concluded that more cooperation was needed. More ways to resolve conflicts big and small. For example, democratic voting systems resolve conflicts in such a way that solutions are found that are acceptable to all parties for the most part. I took it for granted that institutions that provided for more cooperation and less competition were more desirable. I thought that this was what the Enlightenment was all about. My heroes were the Enlightenment superstars: Jeremy Bentham, John Stuart Mill, Rousseau, Diderot, Voltaire, John Locke.

As I sat there and went through the stacks, I discovered another field and another set of superstars. Social choice has a long history going back to the French Enlightenment philosophers, the Marquis de Condorcet and Jean-Charles de Borda, and even further back than that. One of the 19th century superstars in this field was none other than the Rev. C. L. Dodgson otherwise known as Lewis Carroll, the author of Alice in Wonderland. These guys came up with voting systems which are essential to democracy and are essential to the whole notion of cooperation and conflict resolution. The most recent work in this field was by Kenneth Arrow who published a book Social Choice and Individual Valuesin the 1950s which attempted to generalize conflict resolution in society in both the political and economic spheres. Arrow concluded that this was impossible and came up with his famous Impossibility Theorem which was a generalization using sophisticated mathematics of the paradox of voting that was known to Condorcet hundreds of years ago. Therefore, Arrow concluded democracy was impossible and any economic system other than capitalism was impossible too. Hmmm, I thought, this is obviously a cop-out because some political and economic systems are more desirable than others and Arrow has done nothing except to throw cold water on any framework that could consider these. I took it as my self-assigned task to prove that Arrow was wrong, that social choice is possible. My work can be found on the website Social Choice and Beyond.

In “Social Choice and Individual Values,” Kenneth Arrow said , “In a capitalist democracy there are essentially two methods by which social choices can be made: voting, typically used to make ‘political’ decisions, and the market mechanism, typically used to make ‘economic’ decisions.” This paper resolves that dichotomy by developing a meta-theory from which can be derived methods for both political and economic decision making. This theory overcomes Arrow’s Impossibility Theorem in which he postulates that social choice is impossible and compensates for strategic voting, an undesirable aspect of decision making according to Gibbard and Satterthwaite. Thus the politonomics meta-theory spawns both political and economic systems which are indeed possible and which cannot be gamed. In a typical voting system the outcome of an election among several candidates results in one realized outcome – the winner of the election - which applies to all voters. In a typical economic system, a consumer may choose among a variety of possible baskets of consumer items and work programs with the result that multiple realized outcomes are possible with a unique or quasi-unique outcome for each worker/consumer. As the number of possible realized outcomes of a political-economic decision making process increases, the process becomes more economic and less political in nature and vice versa. We show that as the number of possible realized outcomes increases, voter/consumer/worker satisfaction or utility increases both individually and collectively.

I never considered, as I sat there pondering, that there would be people who would argue that what the world needed was not more cooperation but more competition, but, as I sit here today, I realize that the whole conservative right wing is in favor of just that. They want not more cooperation in either the political or economic realm but more competition believing that only winners should prevail and human progress is only possible when you give free reign to those among us who are the most talented, intelligent and ambitious. They believe that competition will result in the strongest among us winning just as Nietzsche believed that a good war hallows every cause. Their ethic is that the naturally gifted elite should prevail, and they are not concerned about what happens to the rest of us or of who is trampled in the process. This is also the philosophy of Ayn Rand as espoused in her novels Atlas Shrugged and The Fountainhead.

The debate today about increasing inequality in the world has to do with the prevalent conservative belief that only the strong should survive and be promoted and that freedom should preclude equality as a value. The rich should get more tax breaks because they are the true instigators of human progress and should be catered to at every turn. Perhaps a few crumbs will trickle down to the rest of us. This kind of thinking is counter to the Enlightenment and is fast returning us to a neo-Dark Age. No more is human progress to be measured in reduction of poverty and extension of basic services like health care to everyone. It is to be measured in terms of the great advances to human civilization like iPads, iPods and iPhones. People who are capable of coming up with these advances should be cut every break and none of the billions of dollars they make should be transferred by government to the least of these among us like the homeless, the poverty-stricken and the destitute because, well, they are the least among us, not the best among us who should be given every break.

Nevertheless, I remain in the camp of those who think that more cooperation in the political and economic spheres will do more for human progress than more competititon. I also have spent about 40 years in my spare time trying to prove that Arrow was wrong, that social choice is not impossible and that democracy in both the political and economic spheres is not only possible but desirable. This has a lot to do with voting systems, democratic institutions and constitutions but also with cooperative economic systems in which freedom is seen not as the freedom to make money at other people's expense (the losers in the competitive struggle) but the freedom to work as much or as little as one chooses and in accordance with one's preferences as much as possible. Freedom from work is for many people just as desirable a goal as the freedom to make billions of dollars, and wealthy people who don't have to work would be the first to tell you that. Economic democracy in my view is more desirable than cutthroat capitalism, and can be practiced not only at the national level, but at the enterprise level in the form of co-ops like the Mondragon Corporation.

Marx's famous definition of the "good society" was "from each according to his ability, to each according to his needs." This of course was perverted in defining communism as a society where all the wealth created by those who had a lot of talent and ability as well as a strong work ethic combined with those who had not so much in those categories would be thrown into a pot and then divided up in equal portions and handed out by the government. Such need not be the case in achieving the "good society." The "needs" part is pretty basic and could probably be accomplished with abouit 10% of the wealth that exists in the world today. Most people can provide for their own needs - no transfer necessary. There are some who cannot and to transfer a small part of the wealth of the wealthy to provide for their basic needs seems to me to be no more than humane. That still leaves the vast amount of wealth in the hands of the wealthy. In other words if you total up how much it would cost to provide for all the basic needs of everyone in the world and tote up how much wealth there exists in the world, it would take a fraction of all that wealth to provide the basic needs for everyone who cannot provide for their basic needs themselves who turn out to be mainly children, seniors and handicapped (whether physically or mentally) people.

A recent documentary by German TV station Deutsche Welle pointed out that half the world's production of food is wasted because super markets only want perfect vegetables and ones with slight blemishes are thrown out even though they are perfectly edible. Shelves need to be fully stocked with bread right up till closing hours even though any bread left over at the end of day will be thrown out as "day old." All the food that is thrown out by advanced nations is enough to feed all the world's hungry three times over although no governments or other institutions, much less the supermarkets themselves, seem to be interested in organizing that effort. This is what I mean by the fact that the basic needs of all the world's people could be satisfied without subtracting much if anything from the world's wealthy although a lot of them would admit they do not need incomes of millions of dollars a day like the Fortune 400 billionaires have.

Another documentary noted that Finnish school children have the highest test scores in the world despite the fact that they have one of the world's shortest school days with 15 minutes intermissions between classes during which time they are encouraged to go outdoors and play. All grades have large amounts of music, art and self-defined projects. They don't teach to the test. They are concerned with the development of each student as an overall human being not just as some super competitive cog in a nationally competitive machine. The Chinese on the other hand have the opposite approach demanding that children learn by rote methods and extra hours in school and at study. The Finnish schools are all public and everyone is accepted into every class. There are no advanced classes or tracking of students into lesser classes if they are not among the elite intellectually. Everyone is thrown in together; yet they have the best outcomes of any country in the world on standardized international tests. Egalitariansim seems to gain the best results.

An egalitarian ethic in which the concern is for the development of the whole human being rather than a promotion of just those who have superior abilities in accordance with a competitive ethic seems to me to be the most humanitarian way to treat both children and adults. The 1948 Universal Declaration of Human Rights already provides for most of the "from each according to their abilities, to each according to their needs" ethic. It calls for free health care which most advanced socierties, with the exception of the United States, already provide. It calls for free education and other public institutions and covers most basic human needs including food and shelter.

Article 25.

(1) Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.

(2) Motherhood and childhood are entitled to special care and assistance. All children, whether born in or out of wedlock, shall enjoy the same social protection.

Article 26.

(1) Everyone has the right to education. Education shall be free, at least in the elementary and fundamental stages. Elementary education shall be compulsory. Technical and professional education shall be made generally available and higher education shall be equally accessible to all on the basis of merit.

(2) Education shall be directed to the full development of the human personality and to the strengthening of respect for human rights and fundamental freedoms. It shall promote understanding, tolerance and friendship among all nations, racial or religious groups, and shall further the activities of the United Nations for the maintenance of peace.

(3) Parents have a prior right to choose the kind of education that shall be given to their children.

All the basic needs of everyone on the planet could be provided for without subtracting much of the wealth of the rich since most people can provide for at least their basic needs without any transfer of wealth whatsover being necessary. Interestingly, the US among other nations does provide food security for the poor through its food stamps program. And of course seniors are provided for through Medicare, Medicaid and Social Security, programs which conservative free marketers are anxious to change or eliminate.

I am with the Enlightenment thinkers especially the English utilitarians like Jeremy Bentham and John Stuart Mill who thought about the happiness of society as a whole and concluded that everyone counted, not only the ones with exceptional talent, ability and other admirable qualities. A society should be judged by how it treats "the least of these my brethren" which is the core and essence of Jesus' teachings but, sad to say, not the core and essence of Christianity as it exists in the world today. Perhaps we should start thinking about an alternative constitution for the US which has the world's oldest constitution (236 years old!) while being the world's youngest advanced nation. Other societies including most European societies while being older than the US have newer constitutions. As far-sighted as the Founding Fathers were, a new and updated constitution incorporating not only political but also economic rights along the lines of the UN Declaration of Human Rights would do much to right the wrongs and shortcomings of present day America and the world.

March 12, 2012

The economy added another 227,000 jobs in February, the Labor Department reported Friday. That's good news, sort of. It means that the recovery is slowly progressing. At this rate, we will be back to pre-recession employment levels sometime around 2018.

However, this growth in jobs was not enough for wages to keep place with inflation; nor did the unemployment rate drop, but stayed stuck at 8.3 percent. Why? Because folks who had given up have started entering the labor force again, but the percentage of people in the labor force is still two points lower than it was before the recession began. A new study by the Economic Policy Institute reports that earnings declined over the past decade even for college graduates -- so much for the education cure.

In short, the recession made a bad problem worse, but the economy on the eve of the recession was nothing to be proud of. Throughout the first decade of the new century, before the recession hit, wages lagged behind living costs for the vast majority of Americans -- because those in the top one percent were capturing such a large share of the economy's total productivity gains.

Some of this trend was the result of globalization undercutting the bargaining power of U.S. workers; some of it resulted from weakened trade unions and minimum wage laws lagging behind inflation.

Flat or declining wages did not result from declining average productivity. So when we finally climb out of this jobs recession, perhaps we can belatedly confront these deeper trends.

Thanks to an extraordinarily effective union, Local 6 of the hotel and restaurant workers union, nearly every large hotel in Manhattan is unionized, and everyone who works in these hotels, from dishwashers to room cleaners to doormen to banquet waiters earns a middle class wage. The union recently signed a seven year contract giving workers a 27 percent wage.

Local 6 is an exceptionally effective union, and New York is a unique tourist destination. But since the vast majority of jobs in America will soon be service sector jobs, not vulnerable to global competition, there is no good economic reason why they can't all be middle class jobs. The challenge is political. We as a society simply need to decide, as President Obama famously told "Joe the Plumber," that we want to "spread the wealth around" rather than having it concentrate at the very top. All service jobs could pay a living wage. How to do that? Unions, wage regulation, progressive taxation, and government using existing powers over contractors that it seldom exercises.

But what about manufacturing? This brings me to the other Jobs of my title, the late Steve Jobs.

The New York Times, in a two part series earlier this year on Apple's Chinese contractor, Foxconn, finally made front page news and added some telling detail to what was already fairly well known. The cool, must-have iPads, iPhones, and iPods to which we are increasingly addicted are manufactured with brutal sweatshop labor in Shenzhen, China, where 230,000 employees are making an average of less than $2 an hour work in a single factory complex. Foxconn's dormitories now have nets outside to prevent suicides.

I recently saw a one-man show, Mike Daisey's amazing "The Agony and the Ecstasy of Steve Jobs," in which Daisey, a spellbinding monologue artist, recounts his own conversations with the workers of Foxconn in Shenzhen.

Daisey was on to Foxconn long before the Times. If you get a chance to see this show, which runs for one more week at New York's Public Theater and which will be on tour in Washington, D.C. and elsewhere later this year, don't miss it. Two weeks ago, Daisey made the stunning decision to put his script in the public domain, so that other performances could go viral.

Daisey wonders out loud: what if everyone who buys these products began upping the pressure on Apple to do right by its workers?

I would add: What if Apple made a decision to bring this work home, and to pay decent wages for it, say $20 an hour. Right now, this is literally impossible, because the production facilities to make such products no longer exist in the United States. But the Pentagon has insisted that America hang on to production capacity for certain other sensitive micro-electronics products. And if hostilities escalated between the U.S. and Beijing, you can bet that we would see a crash program to restore more micro-electronics output at home.

Apple earns about $600,000 per year per employee. It can well afford to share a little more of that with its workers.

The New York Times calculated that it would add only about $65 to the cost of an iPad or iPhone to produce it at home at good wages. And over time, it would tend to cost less, since higher-paid workers lead the company to redouble its investment in automation.

Apple can certainly afford this transition. It is now the richest company in the world, sitting on a pile of nearly a hundred billion dollars in cash. If Apple led, it would become bad form for America's other prestigious companies to manufacture for U.S. markets in foreign sweatshops.

Ralph Nader recently published the most improbable of books, a novel titled Only the Super-Rich Can Save Us. Nader, looking at the grotesque economic and political power imbalance in the U.S., imagined that a cabal of billionaires led by Warren Buffet and Ted Turner have an outbreak of conscience and become crusaders for progressive reform. It's Nader's way of both laying out a reform agenda and spotlighting where the real power lies.

It's a lovely fantasy, but it's not going to happen -- any more than Apple, out of the goodness of its corporate heart, is about to decide to phase out its high-tech Asian sweatshops in favor of decently compensated production jobs in the United States.

But what could perhaps happen is a mass movement of Apple consumers, declaring that it's not cool to treat the people who build these products like beasts of burden or like expendable non-human parts.

Alternatively, as incomes keep falling further behind the cost of living for most Americans, we can comfort ourselves with the thought that we enjoy the coolest of gadgets and that others are even poorer than we are.

Robert Kuttner is co-editor of The American Prospect and a senior fellow at Demos. His latest book is A Presidency in Peril.

March 08, 2012

As we head into an election year, we’re going to increasingly hear that Democrats and Republicans fight like cats and dogs, that there is a civil war in Washington. This describes the state of play on some issues, but on others there is bipartisan agreement to do the wrong thing: Both parties do what the money tells them to do. How this works is subtle and often kept secret, done in rooms meant to shield policy-making while the public is distracted with electoral hoopla. Fortunately for Republic Report readers, I got access to one of these rooms, and I can explain how the money guides policy-making.

It starts with high level party functionaries paid by a rich industry, which uses the talents and connections of those party functionaries to extract government concessions. In this case, it’s the for-profit college industry, which perpetually leaves students with astronomical debt while providing poor quality education. The functionaries were former Bill Clinton advisor Doug Sosnik and Republican consultant Sara Fagen. Rather than fighting like cats and dogs, these two showed a keen sense of bipartisanship as they told leaders of these for-profit education companies how they can use their power to manipulate Congress into handing them more money.

The for-profit colleges, multi-billion dollar companies that rely on federal grants, have collected themselves into the super-boring sounding association known as the Association for Private Sector Colleges and Universities (APSCU). Today, they held a closed-to-the-public but open-to-the-media meeting in Washington, D.C. to plot how to keep Congress from approving stricter regulations on the billions of taxpayer dollars that their corporations receive through federal student loans and grants.

The first session of the day featured a presentation by Democratic consultant Sosnik and Republican consultant Fagen. Before Sosnik and Fagen spoke, an ASPCU representative noted that Sosnik most recently worked for the Motion Pictures Association of America (MPAA) on its legislative campaigns. The MPAA was last seen trying to undermine freedom on the internet through similar political connections and campaign contributions.

Both Sosnik and Fagen delivered PowerPoint presentations where they laid out national polling, explaining to the audience the chances of President Obama getting re-elected. I imagine that they each care about their party winning, since it impacts the fee they can extract from corporations seeking influence. After their polling presentations were completed, the audience had a chance to ask questions. One audience member asked how the for-profit college industry can best impact Congress and the various congressional campaigns that are currently underway.

Fagen laid out a strategy for an astroturf (which means fake grassroots) campaign, saying that it’s “much better to get in front of a candidate running for office before he or she is actually in office.” She referenced the “card check issue,” the Employee Free Choice Act, a controversial bill to strengthen labor unions. Fagen noted that the retail industry engaged in anti-union astroturf operations in swing districts and that when key Democrats were elected, “they were in our corner.” She went on to note that the for-profit college industry should be on the ground in Wisconsin to get candidates for the open U.S. Senate seat to commit to being for or against their legislative agenda.Sosnik then took to the microphone and — despite being a long-time Democrat and close advisor and friend of President Clinton — praised Fagen’s anti-union strategy, noting that she was one of the people who ran the campaign against the Employee Free Choice Act and “she was totally right about that.” Sosnik is not elected, and neither is Fagen – but their opinion matters to policy-makers. And as you’ll see, Sosnik’s cynicism about democracy is fascinating.

“Members of Congress are not always great leaders,” said Sosnik. “They are terrific at seeing when a line has formed and going and getting in front of the line. There’s nothing that politicians are more interested in than themselves and keeping their jobs.” He advised the industry to take its “assets on the ground in Wisconsin” and leverage them against the candidates. Above all else, Sosnik stressed that the industry had to maintain a strong presence on the ground in the districts of key candidates for office (earlier in the presentation, he noted that the MPAA was “roadkill” in its fight for the Stop Online Piracy Act, which he apparently helped spearhead, because it failed to engage the grassroots).

Watch Sosnik and Fagen advise a for-profit college industry that seeks to avoid accountability to students and taxpayers:

:

Presumably Sosnik and Fagen were paid, and paid well, for their appearances. The joint presence of a senior Clinton advisor like Sosnik and a veteran of the Bush White House like Fagen echoes the bipartisan nature of the lobbying effort the for-profits continue to wage to avoid accountability for waste, fraud, and abuse with federal dollars and students’ futures. Democrats and Republican lobbyists can put aside their partisan feelings to come together to assist the for-profit college industry. These lobbyists appear to have one goal that they put before ideology: the money that the for-profit colleges are paying them to ensure that the government continues to hand them as much cash as possible with as few strings attached as possible.

Zaid Jilani

ZAID JILANI is a reporter/blogger for ThinkProgress.org at the Center for American Progress Action Fund. Zaid grew up in Kennesaw, GA, and holds a B.A. in International Affairs with a minor in Arabic from the University of Georgia. Prior to joining ThinkProgress, Zaid interned for Just Foreign Policy and was a weekly columnist at The Red & Black, the University of Georgia’s official student newspaper. He is a co-editor at the Georgia-based blog Georgia Liberal and a regular on RT America's The Alyona Show and The Thom Hartmann Show. He is also an occassional contributor to the op-ed pages of The Atlanta Journal-Constitution. His Twitter handle is @zaidjilani.

February 10, 2012

There is much talk about inequality lately. The top 1% take home 24% of the nation's income. In 1976 they took home just 9%. Wealth inequality is even worse. The top 1% of Americans own 40% of the nation's wealth. The bottom 80% own 7%. The concentration of wealth in the top 1% bodes ill for democracy. An aristocracy is in the process of being created that is controlling the levers of government by means of money in the form of campaign contributions and lobbying. Thus is democracy thwarted.

It shouldn't have to be this way. As technological progress has continued, wealth is being created at a rapid pace. If this wealth were evenly distributed, the average person should only be working 10 or 20 hours per week and have twice the income that he or she now receives. Think about it. Lesson 1 in "Wealth Creation for Dummies" is that as you become more wealthy you should be able to work fewer hours. A modest amount of wealth insures that a person doesn't have to work at all. A wealthy person receives most of their income from the return on their assets - which is another name for wealth - in the form of interest, dividends, rents or other forms of investments such as factories which are mainly capital investments in the form of robots rather than investments in human capital. They receive so-called "unearned income" while people whose only income is from their labor receive "earned income." Being wealthy to the point that you don't have to work does not mean that you have all the commonly imagined accoutrements of wealth - big houses, fancy cars, expensive jewelry etc. You can be wealthy to the point of not having to work and yet not be able to afford more than a modest lifestyle. At that point you have true freedom as you have complete control over your time and energy and are not accountable to anyone.

If wealth were evenly distributed and since most products are manufactured by automated processes requiring little labor, people could have most of what they consume while not having to work much. Certainly with the robotization of the work force and the even distribution of wealth, consumable products should cost virtually nothing. However, in the real world products do cost a great deal and the profits from the sale of those products go mainly to the upper 1% because they own most of the wealth. They own the factories that produce the products; they own the robots. They own the physical capital and supply chains and retail outlets. So rather than the wealth that is created by the robots being evenly distributed, it accumulates more and more in the hands of fewer and fewer people who end up with far more wealth than they really need to live even a high end lifestyle with multiple homes, cars yachts, airplanes, art, jewelry etc. They spend their extra money on lobbying and campaign contributions which gives them control over what has become an ersatz democracy.

Lesson 2 in "Wealth Creation for Dummies" is that as soon as possible you must get yourself in the position of not living paycheck to paycheck. This means that even if you have a good job, you can't be spending your whole paycheck every month shortly after you receive it. Because what happens is that as soon as some unexpected expense pops up, you go into debt and your financial situation worsens because now in addition to your other expenses you have to pay interest on that debt - to some wealthy person for whom it represents unearned income. You need a buffer whether in the form of a savings account or in the form of a Home Equity Line of Credit (HELOC) so that you can manage the ups and downs of cash flow without paying exhorbitant amounts of interest. You also need a second job, the proceeds of which go right into savings and creating wealth. A good way to do this is to buy fixer-uppers, fix them up and rent them out. At this point in time when interest rates and property values are extremely low, it's the ideal time to follow this strategy. As soon as the rent that can be charged exceeds the mortgage to be paid, you have a source of wealth that is creating unearned income and that will go on creating additional income, rent being one form of the phenomenon that wealth creates income, ad infinitum. These assets, unlike a pension, can be passed down from generation to generation.

It takes a surprisingly small amount of wealth to generate an income sufficient to live on providing you don't need to live the lifestyle of the rich and famous. For example, just three mortgage free rentals renting at approximately $1500. per month per property is enough for a small family to live on as long as you live modestly. And just because you collect unearned income every month doesn't mean that you can't continue to work at something you really love doing. Lesson 3 in "Wealth Creation for Dummies": Work as a self-employed person is far more rewarding then work as an employee. When you work for yourself, you aren't subject to being laid off, fired or having your job outsourced. You don't have to take a subservient position relative to an employer or potential employer. You don't have to go begging in the job market for a job. You have control over your time, work the hours you choose and vacation when you want not when your boss tells you to. You don't have to swallow hard and say nothing if your supervisor insults you. You are your own boss. This is what freedom is all about. Freedom is much more than just the freedom to make money which is what the right wing would have you believe. Wealthy people no matter the amount of their wealth are self-employed by definition because they are not dependent on any job or any employer. In today's world of employee uncertainty, this kind of independence is priceless.

But the real world situation is entirely different than the scenarios I've painted in "Wealth Creation for Dummies." Most people live paycheck to paycheck, are entirely dependent on someone giving them a job and are not in a position to contradict their boss. Meanwhile, wealth and the income that wealth produces as a return on assets goes to fewer and fewer people, exacerbating income and wealth inequality. Lesson 5 in "Wealth Creation for Dummies' is to change your ideas about what money is used for. Money shouldn't just be used for consumption. You don't need all the products that TV advertising is urging you to buy. You must develop sales resistance and use your money insofar as is possible for wealth creation. Isn't the goal to get in the position of not having to work? The typical middle class position on this is that you should work for a set period say 30 years as an employee at a job and then collect a pension for the rest of your life. This process does not really create wealth for you; it creates wealth for your employer because the assets the return on which goes to pay your pension are owned by your employer - not you. With a pension once you die, it goes away. If you own the wealth that your pension is based on instead of your employer owning it, you can pass it on to your heirs (Lesson 6).

Second, employers aren't providing set pensions any more - only 401ks which are defined contribution instead of defined benefit plans. This means that they may be totally worthless which many of them have turned out to be when you reach retirement age. Therefore, you have to create wealth for yourself (Lesson 7) instead of counting on your employer to do it for you. Thirdly, 30 year careers are few and far between any more. The shift from defined benefit pensions to 401ks really makes a sham and a mockery out of the traditional middle class aspiration of a college degree and a secure job with a secure retirement. There just ain't no such thing any more. Intead of wealth creation most college students are creating debt in the form of student loans which will follow them the rest of their lives. Therefore, you have to take wealth creation into your own hands and not expect some employer to allow you to live paycheck to paycheck. Now should you expect a college degree to in and of itself create wealth for you? A college degree only gives you a ticket of admission to the corporate world in the form of an employeehood. In this form you are likely to be laid off, outsourced or downsized. You are much better off starting to create wealth right out of high school instead of creating debt which is what most college students are doing. As a self-employed person you don't need a college degree and there are no roads to the creation of wealth that are closed to you. Just ask Bill Gates, Steve Jobs, Michael Dell or Larry Ellison - all college dropouts and high tech billionaires.

If you create wealth for yourself instead of relying on a pension you may be able to retire in less than 30 years. There's no law that determines when you should have to or not have to retire. If you are self-employed you can work as long as you want to. You don't have to retire at 65 if you love your work.

Now the concentration of income in the upper 1% which is a consequence of the concentration of wealth in the upper 1% leads to its own logical contradiction which suggests that this wealth maldistribution is not inevitable. Consider the largest concentration of wealth in the US - the Walton family based on the Wal-Mart chain of stores. But what does Wal-Mart really do? They amalgamate products manufactured in China, arrange them on store shelves and hire a few cashiers to collect money from consumers. It's not rocket science. The same applies to Home Depot, Best Buy, Costco, Target, Loew's and any other large nation wide retail chain. They provide nothing of value but they have concentrated wealth in fewer and fewer hands as they've replaced Mom and Pop operations throughout the country. This begs the question why shouldn't these retail operations which just assemble products made in China, arrange them on store shelves and hire check out people (which are increasingly being replaced with automated check out stations) be cooperatively owned with the rewards of ownership (shares of the wealth) being more evenly distributed among larger and larger numbers of people? It should be a no brainer because nothing these stores are doing requires a large amount of brain power to undertake.

Part of the answer is that the person or persons who started these retail stores were ambitious entrepreneurs who worked long hours to get their operations going. The average person does not have the time or energy (not to mention the capital) to do this or to attract a large number of people to get a cooperative venture going. In other words how do you set something like this up if not for the ambitions of the individual entrepreneur? Here's one way: a group of citizens could petition local government to provide startup money for such a venture. After all local government consists of a bunch of local citizens. If there was enough of a collective will to set up a co-op retail merchandising operation, it could be done using local government to provide capital and manpower and organization. Once in operation a co-op such as this could replace Target, Best Buy, Home Depot, Costco etc and profits could be plowed back into the local population. In addition an operation such as this could provide employment for the local population and a share of the wealth so created. In banking this is already being done in North Dakota which has a publicly owned state wide bank. The profits are owned by the people of North Dakota.

This is exactly what is needed to distribute wealth more evenly and to distribute the demands for necessary labor more evenly. Instead of fewer and fewer people becoming fabulously wealthy and owning multiple million dollar homes which they don't need, the bulk of the population could be in the position of working fewer and fewer hours taking full advantage of the robotization of the work force and having income based on the wealth so created.

Lesson 7: Wealth produces income; income does not produce wealth if your mindset is to consume up to your income level. Therefore, consume less and instead of saving for your old age, invest to create wealth, but invest in real assets not in phony paper financial assets which can evaporate at a moment's notice.

January 13, 2012

The harm today’s youth unemployment is doing will be felt for decades, both by those affected and by society at large

MARIA GIL ULLDEMOLINS is a smart, confident young woman. She has one degree from Britain and is about to conclude another in her native Spain. And she feels that she has no future.

Ms Ulldemolins belongs to a generation of young Spaniards who feel that the implicit contract they accepted with their country—work hard, and you can have a better life than your parents—has been broken. Before the financial crisis Spanish unemployment, a perennial problem, was pushed down by credit-fuelled growth and a prolonged construction boom: in 2007 it was just 8%. Today it is 21.2%, and among the young a staggering 46.2%. “I trained for a world that doesn’t exist,” says Ms Ulldemolins.

Spain’s figures are particularly horrendous. But youth unemployment is rising perniciously across much of the developed world. It can seem like something of a side show; the young often have parents to fall back on; they can stay in education longer; they are not on the scrapheap for life. They have no families to support nor dire need of the medical insurance older workers may lose when they lose their jobs. But there is a wealth of evidence to suggest that youth unemployment does lasting damage.

In the past five years youth unemployment has risen in most countries in the OECD, a rich-country club (see chart 1). One in five under-25s in the European Union labour force is unemployed, with the figures particularly dire in the south. In America just over 18% of under-25s are jobless; young blacks, who make up 15% of the cohort, suffer a rate of 31%, rising to 44% among those without a high-school diploma (the figure for whites is 24%). Other countries, such as Switzerland, the Netherlands and Mexico, have youth unemployment rates below 10%: but they are rising.

The costs mount up

In tough times young people are often the first to lose out. They are relatively inexperienced and low-skilled, and in many countries they are easier to fire than their elders. This all goes to make them obvious targets for employers seeking savings, though their low pay can redress things a little. In much of the OECD youth-unemployment rates are about twice those for the population as a whole. Britain, Italy, Norway and New Zealand all exceed ratios of three to one; in Sweden the unemployment rate among 15- to 24-year-olds is 4.1 times higher than that of workers aged between 25 and 54.

Not only is the number of underemployed 15- to 24-year-olds in the OECD higher than at any time since the organisation began collecting data in 1976. The number of young people in the rich world who have given up looking for work is at a record high too. Poor growth, widespread austerity programmes and the winding up of job-creating stimulus measures threaten further unemployment overall. The young jobless often get a particular bounce in recoveries: first out, they are often also first back in. But the lack of a sharp upturn means such partial recompense has not been forthcoming this time round. In America the jobs recovery since 2007 has been nearly twice as slow as in the recession of the early 1980s, the next-worst in recent decades—and from a worse starting-point. In some countries a rigging of the labour market in favour of incumbents and against the young makes what new jobs there are inaccessible.

Youth unemployment has direct costs in much the same way all unemployment does: increased benefit payments; lost income-tax revenues; wasted capacity. In Britain a report by the London School of Economics (LSE), the Royal Bank of Scotland and the Prince’s Trust puts the cost of the country’s 744,000 unemployed youngsters at £155m ($247m) a week in benefits and lost productivity.

Some indirect costs of unemployment, though, seem to be amplified when the jobless are young. One is emigration: ambitious young people facing bleak prospects at home often seek opportunities elsewhere more readily than older people with dependent families. In Portugal, where the youth unemployment rate stands at 27%, some 40% of 18- to 30-year-olds say they would consider emigrating for employment reasons. In some countries, such as Italy, a constant brain-drain is one more depressing symptom of a stagnant economy. In Ireland, where discouragement among young workers has shot up since 2005 (see chart 2), migration doubled over the same period, with most of the departed between 20 and 35. This return of a problem the “Celtic tiger” once thought it had left behind is treated as a national tragedy.

It’s personal

Another cost is crime. Attempts to blame England’s recent riots on youth unemployment were overhasty. But to say there is no link to crime more generally looks unduly optimistic. Young men are already more likely to break the law than most; having more free time, more motive and less to lose hardly discourages them. Some researchers claim to have identified a causal link between increased youth unemployment and increases in crime, specifically property crime (robbery, burglary, car theft and damage) and drug offences. No such link is seen for overall unemployment. If the crime leads to prison, future employment prospects fall off a cliff.

And then there are the effects on individuals. Young people are hit particularly hard by the economic and emotional effects of unemployment, says Jonathan Wadsworth, a labour economist at the LSE. The best predictor of future unemployment, research shows, is previous unemployment. In Britain a young person who spends just three months out of work before the age of 23 will on average spend an additional 1.3 months in unemployment between the ages of 28 and 33 compared with someone without the spell of youth joblessness. A second stint of joblessness makes things worse.

Research from the United States and Britain has found that youth unemployment leaves a “wage scar” that can persist into middle age. The longer the period of unemployment, the bigger the effect. Take two men with the same education, literacy and numeracy scores, places of residence, parents’ education and IQ. If one of them spends a year unemployed before the age of 23, ten years later he can expect to earn 23% less than the other. For women the gap is 16%. The penalty persists, though it shrinks; at 42 it is 12% for women and 15% for men. So far, the current crisis has not led to these long-term periods of youth unemployment rising very much; almost 80% of young people in the OECD who become unemployed are back in work within a year. But that could well change.

The scarring effects are not necessarily restricted to the people who are actually unemployed. An American study shows that young people graduating from college and entering the labour market during the deep recessions of the early 1980s suffered long-term wage scarring. Graduates in unlucky cohorts suffer a wage decline of 6-7% for each percentage-point increase in the overall unemployment rate. The effect diminishes over time, but is still statistically significant 15 years later.

After a period of unemployment, the temptation to take any work at all can be strong. Wage scarring is one of the reasons to think this has lasting effects, and policies designed to minimise youth unemployment may sometimes exacerbate them. Spain, which has developed a scheme for rolling over temporary contracts to provide at least some chances of employment to the young, should pay heed to the experience of Japan in the early 2000s. Young people unemployed for a long time were channelled into “non-regular” jobs where pay was low and opportunities for training and career progression few. Employers seeking new recruits for quality jobs generally preferred fresh graduates (of school or university) over the unemployed or underemployed, leaving a cohort of people with declining long-term job and wage prospects: “youth left behind”, in the words of a recent OECD report. Japan’s “lost decade” workers make up a disproportionate share of depression and stress cases reported by employers.

Unemployment of all sorts is linked with a level of unhappiness that cannot simply be explained by low income. It is also linked to lower life expectancy, higher chances of a heart attack in later life, and suicide. A study of Pennsylvania workers who lost jobs in the 1970s and 1980s found that the effect of unemployment on life expectancy is greater for young workers than for old. Workers who joined the American labour force during the Great Depression suffered from a persistent lack of confidence and ambition for decades.

There are other social effects, too, such as “full-nest syndrome”. In 2008, 46% of 18- to 34-year-olds in the European Union lived with at least one parent; in most countries the stay-at-homes were more likely to be unemployed than those who had moved out. The effect is particularly notable in the countries of southern Europe, where unemployment is high and declining fertility means small families: a recent study by CGIL, an Italian trade-union federation, found that more than 7m Italians aged between 18 and 35 were still living with their parents. Since 2001 one in four British men in their 20s, and one in six women, have “boomeranged” home for a period. This sort of change will, for good or ill, ripple on down the generations which may, if young people live longer and longer at home, become more spread out.

In lieu of jobs

In some countries, particularly in southern Europe, the main focus for governments should be on opening up labour markets that lock out younger workers (see article). In countries with more flexible labour markets, the emphasis tends to be on “skilling up” young people. This is not a panacea.

Universities can be a source of skills and a place to sit out the doldrums, so students are entering and staying on at university more and more. American graduate schools have received at least 20% more applications since 2008. But as they build up debts, not all these students will be improving their job prospects. Having a university degree still increases the chances of employment, but joblessness among college graduates in America is the highest it has been since 1970.

There are dangers in vocational training, too. The Wolf report, a review of vocational education in Britain published this year, pointed out that the wrong kind of training can actually damage employment prospects. It found that almost a third of 16- to 19-year-olds in Britain are enrolled in low-level vocational courses that have little or no labour-market value. Research indicates that taking a year or two to complete schemes of this sort reduces lifetime earnings unless the schemes are combined with employer-based apprenticeships.

In Germany, seen by many as a model in this regard, a quarter of employers provide formal apprenticeship schemes and nearly two-thirds of schoolchildren undertake apprenticeships. Students in vocational schools spend around three days a week as part-time salaried apprentices of companies for two to four years. The cost is shared by the company and the government, and it is common for apprenticeships to turn into jobs at the end of the training. The youth-unemployment rate in Germany, at 9.5%, is one of the lowest in the EU. Apprentice-style approaches practised in the Netherlands and Austria have had similar results.

Germany’s export-driven economy, with its army of specialised manufacturers, may be particularly suited to the apprenticeship model. It is not obvious how easily it could be imported into more service-oriented economies. America, for example, lacks the institutions—strong unions, compliant management and a hands-on government—that have made the German model so successful. Such programmes would also have to overcome cultural obstacles. Bill Clinton’s school-to-work initiative, a nod to the apprenticeship system, was derided as second-rate education. Even in the skilled trades where apprenticeships have caught on, the model has suffered because of the collapse of the construction industry. Britain, though, seems willing to give it a whirl. Last year 257,000 positions were created.

Yet this may be of little use to the hardest-to-reach under-25s, who often come from backgrounds where worklessness is the norm and the lack of adult role models creates aspiration gaps at an early age. “Targeted programmes with one-on-one attention are what these young people need,” believes Paul Brown, a director of the Prince’s Trust. “Policies aimed at all young people will only make the neediest fall through the cracks.”

As we head toward 2012, there are a number of tax initiatives being proposed for the ballot next year. What separates them? Two of them, being put forth by activist millionaires, are largely regressive in nature aiming to bring in revenue by increasing income, sales, and other taxes on the majority of Californians in order to help fund education and other services. The Governor’s plan is a combination of progressive taxation (starting with earners who make $250,000 and above) and regressive (a sales tax that will hit everyone).

Only the “Millionaires’ Tax to Restore Funding for Education and Essential Services” keeps its aim on the 1% and only the 1% by imposing a 3% tax on all earnings over $1 million and 5% on all earnings over $2 million.

This initiative sponsored by my statewide union would take a huge step towards building a better California by bringing in over $6 billion of much-needed revenue. Where would the money go?

Specifically, the Millionaires’ Tax would allow us to:

Re-hire laid off teachers to reduce class size

Roll back college tuition increases

Restore cuts to essential services for children and seniors

Re-hire laid off emergency responders

Create jobs by repairing roads and bridges

This initiative is superior to the Governor’s proposal for several reasons:

It upholds the principle of progressivity and asks the only group of Californians who have gained over the course of the last several years (millionaires) to sacrifice very little for the greater good.

It allocates expenditures in a broader and more inclusive manner, taking into account the various crucial needs of the state. Education is a big part of it (since education is already a large portion of the state budget) but it also brings in funds for other vital needs that frequently fall by the wayside, such as care for the elderly and poor children.

It is the only initiative with a chance to pass. Recent surveys show the Millionaires’ Tax starting with an approval rating in the 70% range and only moving a couple of points down to a 68% approval rating after the opposition’s arguments are introduced. The other proposals with regressive elements don’t even come close (for instance, the notion of a more regressive “sales and income tax” ends up with 60% disapproval). Thus even if you don’t care about the principle of progressive rather than regressive taxation or social needs other than education, you are still betting on a big loser if you go with the Governor’s proposal. So if you care about schools and vital public services, go with the Millionaires’ Tax.

Who’s behind the Millionaires’ Tax? This proposal is already backed by a wide coalition of unions and community groups including: the California Federation of Teachers, the Courage Campaign, California Calls, Alliance of Californians for Community Empowerment, California Partnership, Inner City Struggle, Equality Alliance, Community Coalition for Substance Abuse Prevention and Treatment, Strategic Concepts in Organizing and Policy Education, Dolores Huerta Foundation, Knotts Family and Parenting Institute, Communities for a New California, Oakland Rising, Causa Justa/Just Cause, The Ella Baker Center for Human Rights, Asian Pacific Environmental Network, CAUSE, Working Partnerships USA, Poder Popular, Warehouse Workers United, Congregations Organized for Prophetic Engagement, Mobilize the Immigrant Vote, PICO California, and the University of California Student Association. Not millionaires or Sacramento politicians, but a true labor-community alliance of the 99%.

As Rick Jacobs, chair and founder of the 750,000 strong Courage Campaign says, “This is the only initiative proposal that would restore funding devastated by the recession, and rehire thousands of teachers, senior care providers and public safety personnel, without affecting the wallets of working families and the middle class. It addresses the heart of the problem: that total income share to the state’s richest 1% has doubled over the last twenty years, while their tax rates have fallen and the 99% have fallen farther behind.”

While some in the Democratic leadership and the house of labor feel obliged to take the path of least resistance and support the Governor’s plan, in doing so, they are accepting a strategy that links Brown’s assault on public sector workers’ pensions to any attempt at raising new revenue. They are also sandbagging the progressive taxes by adding a regressive sales tax in an effort to appease business interests (the same variety of appeasement that has failed miserably and repeatedly at the state and national levels). The curious thing about this latest episode of business as usual in Sacramento is that the pragmatic political argument in favor of this toxic deal doesn’t hold water, as the polling on the purely progressive measure is vastly superior to anything that includes regressive taxes. More importantly, those supporting the Governor’s plan are ignoring the populist momentum of the Occupy Movement and buying into a compromise that makes workers pay for the sins of the 1%.

Clearly, given the choice, most rank and file union workers would prefer our plan, as would the general public. If the Governor and his allies in labor’s leadership prevail in hijacking the promise of our initiative and killing it by tying it to regressive taxes and pension busting, it will be the worst kind of sell out by those who presume to speak for all of labor while failing to consult the rank and file, time and time again. Hopefully, it’s not too late to change course.

This time we deserve better.

Feeling sorry for millionaires? Don’t. They are paying taxes at a lower rate than they did fifteen years ago during the Pete Wilson era. Then they paid at 11%; today their rate is 10.3%. Add to that the fact that close to half of their wealth comes not from income but investments. Rather than creating new jobs, much of their wealth has come from activities that, as Paul Krugman points out, have more to do with “job destruction rather than job creation.” Indeed, over the last few decades they’ve run away with the store. What’s happened?

A few columns back I noted that a Congressional Budget office report showed that “after-tax incomes for the top 1% shot up by 275% from 1979 to 2007” while the bottom 80% saw their share of income decline. Bringing the point closer to home, the California Budget Project (CBP) just released a new study, “A Generation of Widening Inequality,” that indicated the same phenomenon happening here in the Golden State. In sum, the CBP found that, “a disproportionate share of income gains in recent decades has accrued to the very top of the distribution, in spite of continued productivity gains. As a result, the gap between the incomes of those at the high end of the distribution and those at the low end and middle has widened significantly.”

A few more lowlights from the report include the facts that:

Between 1987 and 2009, 35.5% of the inflation-adjusted income of all Californians went to the top 1%. That means that $77.9 billion (an amount just less than the size of California’s 2011-12 budget) went to fewer than 144,000 people.

71.3% of income gains during this period went to the wealthiest 10% of Californians while 2.5% went to the middle fifth of the income distribution.

The wealthiest Californians made significant gains while low and middle income Californians lost ground. Thus the top 1% of Californians increased their inflation-adjusted income by 50.2% between 1987-2009 to reach an average income of $1.2 million. Even the worst recession since the Great Depression failed to erase this decades-long gain.

In contrast, for the middle fifth of Californians, income dropped by 14.8% to an average of $35,000 in 2009, the lowest level since at least 1987.

The top 1% of Californians received 18.4% of income in 2009, up from 13% in 1987. Thus one out of five dollars went to one out of 100 Californians in 2009.

In contrast, the bottom 80% received 38.7% of total income, down from 46.6% in 1987. Thus 2 out of 5 dollars went to 80 out of 100 Californians.

California has one of the widest income gaps in the United States—the seventh biggest gap in America—putting us between Alabama and Texas. In 2010, 6.1 million (or over 16%) of Californians lived in poverty (including 2.2 million children—over 23% of the total).

In contrast 33,900 millionaire taxpayers (or 0.2%) had combined incomes of $104 billion in 2009. That’s 11 times the income needed to lift every single Californian out of poverty.

Hence it’s certainly not time to pity millionaires. It’s time for them to sacrifice a little for the greater good of our state and the future of our children.

To find out more about the campaign, pledge your support, and/or read the ballot measure in its entirety go to CFT.org.

November 26, 2011

DAVIS, Calif. - Violent confrontations between police and protesters at two University of California campuses have drawn a new cadre of students into the Occupy Wall Street movement and unleashed what some historians call the biggest surge in campus activism since the 1960s.

While Occupy Wall Street protesters have a broad set of grievances that include income inequality and perceived corporate greed, many students have more specific concerns: soaring tuition, campus budget cuts, and fear of heavy student loan debt and lack of job opportunities upon graduation.

The Occupy protests - and the police response to them - have swelled the ranks of campus activists in recent weeks. (photo: Kelly Schott)

Student protests related to these issues have broken out sporadically on U.S. college campuses over the past few years, but the Occupy protests - and the police response to them - have swelled the ranks of campus activists in recent weeks.

A crowd of about 2,000 students, professors and parents held a rally at UC Davis on Monday and called for university Chancellor Linda Katehi to resign after police last week pepper-sprayed students sitting passively on the campus quad.

Video of an officer spraying an orange-colored pepper spray directly into the faces of cross-legged students circulated heavily on television and the Internet, prompting outrage as well as a wave of cartoon parodies.

"We didn't really know what it was until we actually were here on the quad (quadrangle) seeing fellow students getting maced," said John Caccamo, an 18-year-old biology student at UC Davis. The campus, near Sacramento, is not known as a hotbed of activism.

"This is the first time in the 11 years I've been here that students have said - 'Wait a minute, I need to wake up to where I am and what's going on,'" UC Davis art professor Robin Hill told Reuters at the Davis rally.

At UC Berkeley, a cradle of 1960s student activism, students and faculty members were hit with nightsticks earlier this month when campus police moved to break up an Occupy encampment.

The president of the 10-campus UC system, Mark G. Yudof, said he was "appalled" by the Berkeley and Davis incidents and has hired William J. Bratton, former police chief of New York and later Los Angeles, to lead an investigation.

TUITION HIKES

The uptick in student activism has coincided with the efforts by authorities in many cities to shut down Occupy encampments. College campuses are increasingly a focal point of the movement in California and elsewhere.

In New York, protesters at Baruch College who were demonstrating against tuition increases scuffled with police earlier this week, leading to a dozen arrests.

At UC Davis, an encampment of some 100 tents has sprung up since Monday's rally. Encampments are also in place at UC Berkeley and other California campuses.

New York University historian Robert Cohen said the Occupy movement on California campuses is accelerating quickly compared with the student movement of the 1960s.

photo: Johanna Clearfield

"If you date things from the Port Huron Statement and the summer of '62, it wasn't really until the fall of '64 that there was a mass student movement on campus," he said. The Port Huron Statement was the manifesto of the Students for a Democratic Society, one of the key groups of the 1960s New Left movement in the United States.

The 1960s and early 1970s were a time of great social unrest as college students rallied against the Vietnam war and in support of minority and women's rights.

Angus Johnston, a historian at City University of New York, said, "What we have had up until now is something very similar to the early 1960s, where you had not a huge number of activists but a committed core who were working really hard but weren't getting huge amount of traction from media or fellow students."

California students have regularly protested tuition hikes since the economy slumped three years ago. Tuition for in-state students in the ten campuses of the University of California reached $12,192 this year, up from $2,274 two decades ago.

At the 23 campuses of the California State University system, which is increasingly plagued by overcrowding, tuition this year is $5,472, up from $1,572 as recently as 2002-2003.

In part because of the tuition hikes, a growing number of students now face large student loan debts, with two-thirds of 2010 graduating seniors nationally in debt an average of $25,250, according to the Institute for College Access and Success. That is up 5 percent from the year before.

Some earlier California demonstrations over tuition resulted in serious scuffles with police that included use of pepper spray and Tasers. One woman had reconstructive surgery after a UC Berkeley police officer hit her with a nightstick.

But those incidents received far less attention than those recently associated with the Occupy movement.

"When a cop pepper-sprays a student, everyone can sort of imagine their children, or their nieces or nephews, their friends who are students," said Kyle Arnone, a 26-year old teaching assistant at the University of California's Los Angeles campus.

"It's harder for the public to stigmatize student protesters as being a bunch of hippie, unemployed people that are difficult to relate to."

(Additional reporting by Laird Harrison in Berkeley and Steve Gorman in Los Angeles; Editing by Jonathan Weber and Paul Simao.)

November 07, 2011

Much has been said about Occupy Wall Street's lack of particular demands. However, their inchoate demands are numerous and plentiful, and what they amount to when totaled up is a complete repudiation of the organization of business and government and the way they are now constituted which isn't the way the Founding Fathers envisioned them at all. The way business is being conducted in the US amounts to a transmogrification of American values under the guise of an evolution of those values. America has morphed into a pseudo republic based on lies and hypocrisy, on militarism in the name of rationality, on the worship of money and the legitmation of any means to obtain it. Without getting specific the Occupy movement represents a repudiation of these abhorrent values which represent the corruption of everything Americans used to hold dear in the service of unmitigated greed and a glorification of unlimited wealth regardless of the plight of the vast majority of the people.

What the Occupy movement really wants in a vague indefinite way among other things is

(1) Getting money out of politics. That encompasses two ideas: that political campaigns should be publicly funded instead of funded by Wall Street and other wealthy interests and that lobbyists should be gotten out of Washington. Right now 40,000 lobbyists swarm Capitol Hill writing legislation in favor of the corporations that pay them an average of $300,000. starting salary to obtain legislation that stacks the cards in the corporations' favor. Is it any wonder tax policy favors the rich and exploits the poor? Does anyone truly think that getting money out of politics can be accomplished without a revolution? No way. The wealthy and the powerful will never back off. They have morphed American democracy into a plutocracy, and Democrats, who by and large have been bought off by the same wealthy interests, are not a true opposition party. They talk out of one side of their mouth while fund raising out of the other. True democracy cannot exist again until politics becomes something other than the tool of monied interests.

(2) The rich must pay their fair share of taxes. Tax policy as a result of frenetic lobbying has favored the rich while exploiting the poor. That's the whole purpose of lobbying: to seek tax advantages for the rich at the expense of the poor. That's the whole raison d'etre for lobbyists getting paid their obscene salaries. Reagan and Greenspan were experts at raising taxes on the poor while lowering them on the rich and at the same time obfuscating what they were doing and convincing the middle class that taxes were being fairly raised or lowered on everyone. Not true. Implicit in the tax code is favorable treatment for the upper 1% and an albatross around the neck of the poor and middle class - the 99%. Wealthy Wall Streeters pay only a 15% capital gains tax and benefit from "carried interest" which gives them the same tax rate no matter how many billions they make. And Republicans fight like hell to preserve these tax advantages for the rich, every last penny of them. They will never agree to tax capital gains as ordinary income, a millionaires's tax or a financial transactions tax. Does anyone think that any of these things can be accomplished without a revolution?

(3) The filibuster rule. The most antidemocratic tool of the Republican dominated Senate. A return to democracy would require the abolition of the filibuster rule. Does anyone think this can be accomplished without a revolution? The filibuster rule means that the majority does not rule and never will again as long as the present regime holds sway.

(4) Health care as a right. Medicare for all. Medicare's overhead is 3%. Private health insurance's overhead is 30%. Health insurance corporation CEOs made an average of $11 million last year while the highest salary paid to anyone in Medicare administration was less than $200,000. That's the reason why health care is becoming so expensive with paltry outcomes. Private health insurance corporations are under Wall Street's thumb. Wall Street demands higher and higher profits and increasing returns for investors. The result comes about from reducing the Medical Loss Ratio (MLR) which is the percentage paid out for actual medical care compared to the percentage paid out to investors and CEOs. I'ts a classic case of profit over people and again Wall Street is the culprit. Is there a theme developing here? Wall Street has its finger in every pie of the economy demanding that profits be placed over people. The Occupy Wall Street movement has pointed its finger at the exact culprit in every facet of American life that needs changing and Wall Street is at the heart of it. Does anyone think the US will join the rest of the world in providing a universal, cost contained health care system without a revolution? There is no way that "reform" will accomplish this. Obamacare was a valiant effort, but, ultimately, it is no complete solution, and its provisions are subject to being rolled back at the first opportunity by Republicans who want to eliminate not only Obamacare but also social security, Medicare, Medicaid and any other social program benefitting the poor and middle class.

(5) The student loan crisis. The heart of the student loan crisis is the privatization of the student loan industry. Instead of assisting or subsidizing students to get a college education, privatization has led to the exploiting of students in order to maximize profits. Again Wall Street is at the heart of the problem demanding higher and higher returns for investors. Instead of assisting students, the private student loan industry exploits them burdening them for life with debt which cannot be discharged in bankruptcy. Republicans and Wall Street worked together to change the law in 2006 which now requires students to pay for life to discharge their debt even going so far as to allow garnishing of their social security benefits. Democratic legislation under Obama has rolled back some of these draconian measures but has done nothing to reverse the bankruptcy law of 2006. Again Wall Street has been catered to and profits have been placed above people. Does anyone think students will ever be able to dischartge student loan debt in bankruptcy without a revolution?

(6) The foreclosure crisis. Wall Street was allowed to get completely off the hook with regard to mortgage loan modification. The performance of Obama's Home Affordable Modification Program (HAMP) has been underwhelming at best. Housing experts say the $1,000 payments mortgage servicers get for successful modifications, and the lack of consequences for disobeying program guidelines, don't provide enough incentive to modify many mortgages. The well intentioned Obama administration made mortgage modification voluntary on the part of the banks. Guess what? Wall Street has decided it would not "volunteer" to reduce its profits by giving underwater home owners a break. Again the middle class gets screwed in order to maximize Wall Street profits. What was Obama thinking? Does anyone think Wall Street will write down mortgages giving themselves a voluntary haircut without a revolution? Does anyone think Republicans will have a change of heart and suddenly decide to do the right thing with respect to the middle class against the wishes of Wall Street as long as they control at least one branch of Congress or even if Democrats control both branches of Congress and the Presidency as long as the filibuster rule is in effect? Does anyone think mortgages will ever be modified favoring the middle class without a revolution?

(7) Jobs. Does anyone think the government will ever create jobs directly by reinstating an FDR style Works Progress Administration (WPA) or Civilian Conservation Corps (CCC) or even an infrastructure bill without a revolution? Will it ever be the policy of the US to be the employer of last resort without a revolution? It'll never happen. Instead, homelessness on an ever increasing scale will become a "normal" part of American life because this is perfectly consistent with capitalism. The impoverishment of millions will become normalized. As Herman Cain says, "If you don't have a job, blame yourself." THe US will join the rest of the underdeveloped world in a world class regression to a society composed of the very rich and an extremely impoverished class of everyone else.

(8) Corporations are people; money is speech. The Citizens United Supreme Court decision verified that corporations are people and money is speech. In particular corporations can spend as much money as they want on political advertising. They have an unlimited right to spend as much as they want to get the candidates elected who will do their bidding. They can propagandize to their heart's content, and the easily led lemmings will buy it and follow them off a cliff. There is no other consideration in electoral politics than money. Democracy is irrelevant; plutocracy shall rule the day. Does anyone think that anything short of a revolution will change this state of affairs?

(9) The war in Afghanistan should be ended, and the $2 billion per week that the US is spending there should be spent on improving the lives of American citizens. The military-industrial complex budget should be cut in half. The US spends more on its military than all the rest of the world combined. It has over 1000 military bases located in just about every country in the world. This money is being wasted because defense contractors have some of the strongest and most prolific lobbyists on Capitol Hill. According to Prophets of War, Lockheed Martin and the Making of the Military-Industrial Complex by William D Hartung: Lockheed Martin "spent $15 million on lobbying and campaign contributions in 2009 alone. Add to that its 140,000 employees and its claim to have a prescence in forty-six states, and the scale of its potential influence starts to become clear. And while its current political activities are perfectly legal, the company has also been known to break the rules: It ranks number one on the database on contractor misconduct maintained by the Washington-based watchdog group Project on Government Oversight (POGO); according to POGO, Lockheed Martin has '50 instances of criminal, civil or administrative misconduct since 1995.'" So the military-industrial complex of which Lockheed Martin is the leading exponent uses its poltical influence in Washington to make sure it keeps its profits high as Wall Street demands. Again Wall Street is implicated as it demands the highest possible profits for its investors in the military-industrial complex.

Instead of overspending on the military-industrial complex, the US should adopt the model that was successfully used recently in Libya. Military goals were accomplished by joining with NATO partners to spread the cost, and not one American life was lost. Does anyone think the powerful defense contractor lobby will back down, and American taxpayer money will be spent primarily on benefitting the American people instead of trying to control and dominate the world without a revolution?

The social contract which implied that, if you studied hard, obtained a college degree and tended to your knitting, you would be rewarded with a good job has completely broken down. Corporations have no responsibility to provide anyone with a job. Instead their only allegiance at the behest of Wall Street is to their bottom line. Wall Street demands that they increase profits. They do so not by providing American jobs but by outsourcing jobs to wherever in the world labor is cheapest. Then they turn around and demand that their taxes be lowered and regulations be gutted, and say disingenuously that that is the only way they will hire more people. But they continue to outsource jobs even though their taxes are the lowest of any historical period since the Great Depression and they are sitting on $2 trillion in cash that they prefer not to use employing people. Instead they buy back their own stock and gamble on Wall Street.

So what is a college education worth these days? Not much. It does not represent the promise of a happy future but instead a burden of debt which may last a life time. The education industry goes on an advertising binge to convince potential students that the only way they will have a promising future is to matriculate and borrow money. Hopefully, students are waking up to this sham. A college diploma used to be a ticket of admission to employment with a corporation. Certainly most college diplomas do not prepare one to become self-employed, only employed by others. If a person seeks to be self-employed, they do not need a college diploma in most cases. They don't need a ticket of admission to the corporate world in order to start their own business. Steve Jobs had no college diploma. Bill Gates has no college diploma. Larry Ellison has no college diploma. These are billionaires in the world of high tech. They do, however, want their employees to have college diplomas, and it matters little to them whether these employees come from the US, India, China, Korea or someplace else. In fact they prefer overseas college graduates because they will work cheaper. Most contractors and tradesmen do not need college diplomas, and the work they do for the most part is localized and can't be exported. A word to the wise ...

Each and every public space and institution is under attack by Republicans. Public schools, public parks, public libraries are being defunded as are public teachers, park rangers, librarians, police and firemen. Republican goals are to diminish public spaces and the jobs supporting them so that they can "drown them all in the bathtub" as Grover Norquist wants. Public spaces are being impoverished at the same time private wealth is being enhanced by every means available. Public America is being turned into poverty while private America gains. And when public spaces and public jobs are diminished, the poor and middle class suffer because the rich only use private spaces - private resorts, private universities, private security companies, private libraries, private schools. A country can be rich in private wealth but poor and in debt with respect to public wealth. Such is the fate of the US under Republican rule.

The Occupy Wall Street movement is joining with movements all over the world in waking up to the fact that Wall Street is at the heart of the world's problems. They are wise not to particularize their demands because then they would be offered some sham, watered down solution which would do nothing to curtail Wall Street's power and its dominance over not only America's but Europe's political systems. Neither the US nor the euro zone has the guts to stand up to Wall Street and its extensions in Europe because this might lead to another recession. Instead, they put bandaids on the present system in the hopes that they will be able to normalize things even though "normal" means the impoverishment and the indenturization of the majority of the people.

August 03, 2011

Mr. President, this is a pivotal moment in the history of our country. In the coming days and weeks, decisions will be made about our national budget that will impact the lives of virtually every American in this country for decades to come.

At a time when the richest people and the largest corporations in our country are doing phenomenally well, and, in many cases, have never had it so good, while the middle class is disappearing and poverty is increasing, it is absolutely imperative that a deficit reduction package not include the disastrous cuts in programs for working families, the elderly, the sick, the children and the poor that the Republicans in Congress, dominated by the extreme right wing, are demanding.

In my view, the President of the United States of America needs to stand with the American people and say to the Republican leadership that enough is enough. No, we will not balance the budget on the backs of working families, the elderly, the sick, the children, and the poor, who have already sacrificed enough in terms of lost jobs, lost wages, lost homes, and lost pensions. Yes, we will demand that millionaires and billionaires and the largest corporations in America contribute to deficit reduction as a matter of shared sacrifice. Yes, we will reduce unnecessary and wasteful spending at the Pentagon. And, no we will not be blackmailed once again by the Republican leadership in Washington, who are threatening to destroy the full faith and credit of the United States government for the first time in our nation’s history unless they get everything they want.

Instead of yielding to the incessant, extreme Republican demands, as the President did during last December’s tax cut agreement and this year’s spending negotiations, the President has got to get out of the beltway and rally the American people who already believe that deficit reduction must be about shared sacrifice.

It is time for the President to stand with the millions who have lost their jobs, homes, and life savings, instead of the millionaires, who in many cases, have never had it so good.

Unless the American people by the millions tell the President not to yield one inch to Republican demands to destroy Medicare and Medicaid, while continuing to provide tax breaks to the wealthy and the powerful, I am afraid that is exactly what will happen.

So, I am asking the American people who may be listening today that if you believe that deficit reduction should be about shared sacrifice, if you believe that it is time for the wealthy and large corporations to pay their fair share, if you believe that we need to reduce unnecessary defense spending, and if you believe that the middle class has already sacrificed enough due to the greed, recklessness and illegal behavior on Wall Street, the President needs to hear your voice, and he needs to hear it now.

Go to my website: sanders.senate.gov and send a letter to the President letting him know that enough is enough! Shared sacrifice means that it’s time for the wealthiest Americans and most profitable corporations in America to pay their fair share and contribute to deficit reduction.

Mr. President, as you know, this country faces enormous challenges.

The reality is that the middle class in America today is collapsing and poverty is increasing.

When we talk about the economy, we have got to be aware that the official government statistics are often misleading. For example, while the official unemployment rate is now 9.1%, that number does not include the large numbers of people who have given up looking for work and people who want to work full-time but are working part time.

And, when you take all of those factors into account, the real unemployment rate is nearly 16%.

Further Mr. President, what we also must understand is that tens of millions of Americans are working longer hours for lower wages. The reality is that over the last 10 years, median family income has declined by over $2,500.

As a result of the greed, recklessness and illegal behavior on Wall Street, which caused this terrible recession, millions more have lost their homes, their pensions, and their retirement savings.

Unless we reverse our current economic course our children will have, for the first time in modern American history, a lower standard of living than their parents.

Mr. President, we throw out a lot of numbers around here. But, I think it is important to understand that behind every grim economic statistic are real Americans who cannot find a decent paying job, and are struggling to feed their families, put a roof over their heads or to just stay afloat.

Last year, I asked my constituents in Vermont to share their personal stories with me—explaining how the recession, which started more than three years ago, has impacted their lives. In a matter of weeks, more than 400 Vermonters responded and I also heard from people throughout the country who are struggling through this terrible recession.

Their messages are clear. People are finding it hard to get jobs or are now working for lower wages than they used to earn. Older workers have depleted their life savings and are worried about what will happen to them when they retire. Young adults in their 20s and 30s are not earning enough to pay down college debt. People of all ages, all walks of life, from each corner of Vermont—have shared their stories with my office.

Let me just read a few of these letters:

The first is from a 51 year old woman from West Berlin, Vermont who wrote “Dear Mr. Sanders, Don’t really know what to say, I could cry. My significant other was out of work for a year, now he works in another state. I’ve been out of work since April. Our mortgage company wants the house because we can’t make the payments. I can’t find a job to save my soul that will pay enough to make a difference. How bad does it have to get! My mother went through the Great Depression and here we go again. I figure that I’m going to lose everything soon! I’m a well educated person who can’t see through the fog.”

A gentlemen in his mid-50’s from Orange County, Vermont wrote: “After being unemployed three times since 1999 due to global trade agreements, I now find myself managing a hazardous waste transfer facility that pays about 25% less than what I was making in 1999. My wife’s children have moved back in, unemployed. And we are saving very little for retirement. If things don’t improve soon we will likely have to work until we die. We consider ourselves lucky that we are employed. Our children’s friends tend to show up around meal time. They are skinny. We feed them. This is no recession, it’s a modern day depression.”

A woman in her late 40s from Westminster, Vermont wrote: “I am a single mom in Vermont, nearly 50. I patch together a full time job making $12 an hour and various painting jobs and still can’t afford to get myself out of debt, or make necessary repairs on my home. No other jobs in sight, I apply all the time to no avail. Food and gas bills go up and up, but not my income. I have no retirement at all, can’t afford to move, feeling stuck, tired, and hopeless.”

And a 26 year old young man from Barre, Vermont wrote: “In 2002, I received a scholarship to Saint Bonaventure University, the first in my family to attend college. Upon graduation in 2006, I was admitted to the Dickinson School of Law at Penn State University, and graduated in 2009 with $150,000 of student debt. In Western New York I could find nothing better than a $10 an hour position stuffing envelopes … I live in a small studio apartment in Barre without cable or internet … I have told my family I don’t want them to visit because I am ashamed of my surroundings … My family always told me that an education was the ticket to success, but all my education seems to have done in this landscape is make it impossible to pull myself out of debt and begin a successful career.”

Mr. President, just over the last two weeks, nearly 500 people from Vermont and throughout the U.S. have written me about their experiences with trying—often in vain—to find affordable dental care. One wrote: “I can’t afford health insurance so dental work is definitely out. I agree [that] … we are so backward in this country, even though studies have linked bad dental care to heart problems and cancer.”

Mr. President, when the Republicans are talking about trillions of dollars in savage cuts this is what they are talking about. They’re talking about throwing millions and millions of people off of Medicaid. Let me tell you what that means.

Earlier this year Arizona passed budget cuts that took patients off its transplant list. As a result people who were kicked off the list have died. Not because they couldn’t find a donor but because the state decided it could no longer afford to pay for their transplants. To make matters worse Arizona’s Governor has gone further, asking the federal government for a waiver to kick off another 250,000 from its Medicaid program.

They’re talking about making it impossible for working class families to send their kids to college. They’re talking about cuts in nutrition programs which will increase the amount of hunger in America, which is already at an all time high. According to a 2009 study, there are over 5 million seniors who face the threat of hunger, almost 3 million seniors who are at risk of going hungry, and almost 1 million seniors who do go hungry because they cannot afford to buy food. The Republicans in Congress would make this situation much, much worse.

Mr. President, this is a lot of pain that the Republicans are tossing out while they want to protect their rich and powerful friends. In my view, the president has got to stand tall, take the case to the American people, and hold the Republicans responsible if the debt ceiling is not raised and the repercussions of that.

That, Mr. President, is what’s going on in the real world. People fighting to keep their homes from falling into foreclosure; struggling with credit card debt; marriages have been postponed; lives have been derailed; and retirement savings have been raided to pay for college tuition, to keep their businesses afloat, or simply to keep gas in their car and pay their bills. That is what is going on in the real world.

And, Mr. President, while the middle class disappears and poverty is increasing, there is another reality and that is that the gap between the very rich and everyone else is growing wider and wider. The United States now has, by far, the most unequal distribution of wealth and income of any major country on earth.

Today, the top one percent earns over 20 percent of all income in this country, which is more than the bottom 50 percent earns. Over a recent 25 year period, 80 percent of all new income went to the top one percent. In terms of the distribution of wealth, as hard as it may be to believe, the richest 400 Americans own more wealth than the bottom 150 million Americans.

The rich get richer, the poor get poorer, and the middle class continues to disappear. That is what is going on in this country in the year 2011, and we have all got to understand that.

Mr. President, everybody knows this country faces a major deficit crisis and we have a national debt of over $14 trillion. What has not been widely discussed, however, is how we got into this situation in the first place. A huge deficit and huge national debt did not happen by accident. It did not happen overnight. It happened, in fact, as a result of a number of policy decisions made over the last decade and votes that were cast right here on the floor of the Senate and in the House.

Let’s never forget, as we talk about the deficit situation, that in January of 2001, when President Clinton left office, this country had an annual federal budget surplus of $236 billion with projected budget surpluses as far as the eye could see. That was when Clinton left office.

What has happened in the ensuing years? How did we go from huge projected surpluses into horrendous debt? The answer, frankly, is not complicated. The CBO has documented it. There was an interesting article on the front page of the Washington Post on April 30, talking about it as well. Here is what happened.

When we spend over $1 trillion on wars in Afghanistan and Iraq and choose not to pay for those wars, we run up a deficit. When we provide over $700 billion in tax breaks to the wealthiest people in this country and choose not to pay for those tax breaks, we run up a deficit. When we pass a Medicare Part D prescription drug program written by the drug companies and the insurance companies that does not allow Medicare to negotiate prescription drug prices and ends up costing us far more than it should—$400 billion over a 10-year period—and we don’t pay for that, we run up the deficit. When we double military spending since 1997, not including the wars in Afghanistan and Iraq, and we don’t pay for that, we drive up the deficit.

Further, Mr. President, the deficit was also driven up by the greed, recklessness and illegal behavior on Wall Street, which caused the worst economic crisis since the Great Depression. Millions of Americans lost their jobs and revenue was significantly reduced as a result.

Mr. President, the end result of all of these unpaid-for policies and actions—year after year of the deficits I just described—is a staggering amount of debt. When President Bush left office, President Obama inherited an annual deficit of $1.3 trillion with deficits as far as the eye could see, and the national debt more than doubled from when President Bush took office.

The reality is Mr. President, if we did not go to war in Iraq, if we did not pass huge tax breaks for millionaires and billionaires, who didn’t need them, if we did not pass a prescription drug program with no cost control written by the drug and insurance companies, and if we did not deregulate Wall Street, we would not be in the fiscal mess that we find ourselves in today. It really is that simple.

In other words, the only reason we have to increase our nation’s debt ceiling today is that we are forced to pay the bills that the Republican leadership in Congress and President Bush racked up.

Now, Mr. President, given the decline in the middle class, given the increase in poverty, and given the fact that the wealthy and large corporations have never had it so good, Americans may find it strange that the Republicans in Washington would use this opportunity to make savage cuts to Medicare, Medicaid, education, nutrition assistance, and other lifesaving programs, while pushing for even more tax breaks for the wealthy and large corporations.

Unfortunately, it is not strange. It is part of their ideology. Republicans in Washington have never believed in Medicare, Medicaid, federal assistance in education, or providing any direct government assistance to those in need. They have always believed that tax breaks for the wealthy and the powerful would somehow miraculously trickle down to every American, despite all history and evidence to the contrary. So, in that sense, it is not strange at all that they would use the deficit crisis we are now in as an opportunity to balance the budget on the backs of working families, the elderly, the sick, the children and the poor, and work to dismantle every single successful government program that was ever created.

And, that’s exactly what the Ryan Republican budget that was passed in the House of Representatives earlier this year—and supported by the vast majority Republicans here in the Senate just last month—would do. Here are just a few examples:

The Republican budget passed by the House this year would end Medicare as we know it within 10 years.

The non-partisan CBO estimates that under the Ryan proposal, in 2022, a private health care plan for a 65-year-old equivalent to Medicare coverage would cost about $20,500, yet the Republican budget would provide a voucher for only $8,000 of those premiums. Seniors would be on their own to pay the remaining $12,500—a full 61% of the total. How many of the 20 million near-elderly Americans who are now ages 50-54 will be able to afford that? This approach would transfer control of Medicare to insurers and there would be no guaranteed benefits, essentially ending Medicare as we know it.

The Republican budget would force 4 million seniors in this country to pay $3,500 more, on average, for their prescription drugs by re-opening the Medicare Part D donut hole.

Under the Republican budget, nearly 2 million children would lose their health insurance over the next 5 years by cuts to the Children’s Health Insurance Program, according to the Congressional Budget Office.

At a time when 50 million Americans have no health insurance, the Republican budget would cut Medicaid by over $770 billion, causing millions of Americans to lose their health insurance and cutting nursing home assistance in half—threatening the long-term care of some 10 million senior citizens.

The Republican budget would completely repeal the Affordable Health Care Act preventing an estimated 34 million uninsured Americans from getting the health insurance they need.

At a time when the cost of a college education is becoming out of reach for millions of Americans, the Republican budget would slash college Pell grants by about 60% next year alone—reducing the maximum award from $5,550 to about $2,100.

At a time when over 40 million Americans don’t have enough money to feed themselves or their families, the Republican budget would kick up to 10 million Americans off Food Stamps, by slashing this program by more than $125 billion over the next decade.

At a time when our nation’s infrastructure is crumbling, the Republican budget passed in the House and supported by all but a handful of Republicans here in the Senate would slash funding for our roads, bridges, rail lines, transit systems, and airports by nearly 40 percent next year alone.Yet despite the fact that military spending has nearly tripled since 1997, the House Republican budget does nothing to reduce unnecessary defense spending. In fact, defense spending would go up by $26 billion next year alone under the Republican plan.

Interestingly enough, at a time when the rich are becoming richer, when the effective tax rates for the wealthiest people, at 18 percent, are about the lowest on record, at a time when the wealthiest people have received hundreds of billions of dollars in tax breaks, at a time when corporate profits are at an all-time high and major corporations making billions of dollars pay nothing in taxes, my Republican colleagues, in their approach toward deficit reduction, do not ask the wealthiest people or the largest corporations to contribute one penny more for deficit reduction.

In fact, the Republican budget would keep the good times rolling for those who are already doing phenomenally well—it provides over $1 trillion in tax cuts to millionaires and billionaires by permanently extending all of the Bush income tax cuts; reducing the estate tax for multi-millionaires and billionaires; and lowering the top individual and corporate income tax rate from 35 to 25 percent.

Mr. President, the Republican idea of moving toward a balanced budget is to go after the middle-class, working families, and low-income people, and to make sure the millionaires and billionaires and largest corporations in this country that are doing phenomenally well do not have to share in the sacrifices being made by everybody else. They will be protected. The Republican approach to deficit reduction in Washington is the Robin Hood philosophy in reverse: taking from the poor and giving to the rich.

And it’s not as if it’s good for our economy. Mark Zandi, the former economic advisor to John McCain when he was running for president, has estimated that the Republican budget plan will cost 1.7 million jobs by the year 2014, with 900,000 jobs lost next year alone.

The House Republican budget is breathtaking in its degree of cruelty.

But, don’t take my word for it.

In a letter to Congressional leaders after the House GOP plan was introduced, nearly 200 economists and health care experts wrote, “turning Medicare into a voucher program would undermine essential protections for millions of vulnerable people. It would extinguish the most promising approaches to curb costs and to improve the American medical care system.”

Jeffrey Sachs, an economics professor at Columbia University, who was a key economic adviser to the World Bank, the IMF, and the World Health Organization, told MSNBC last April that the House Republican plan, “goes right out to destroy Medicaid within the next few years, slashing it drastically. And then on Medicare, it delays [cuts] for 10 years, and then [the House Republican plan] goes out to destroy it, to make sure that elderly people will not have a guaranteed access to health care. They will be getting some premium [support] but they`re going to have to put a lot of money out of pocket.”

Robert Greenstein, the President of the Center on Budget and Policy Priorities, said last April that the House Republican budget “proposes a dramatic reverse-Robin-Hood approach that gets the lion’s share of its budget cuts from programs for low-income Americans—the politically and economically weakest group in America and the politically safest group for Ryan to target—even as it bestows extremely large tax cuts on the wealthiest Americans. Taken together, its proposals would produce the largest redistribution of income from the bottom to the top in modern U.S. history, while increasing poverty and inequality more than any measure in recent times and possibly in the nation’s history.”

Ezra Klein, a columnist at the Washington Post wrote last April that “the budget Ryan released is not courageous or serious or significant. It’s a joke, and a bad one. For one thing, Ryan’s savings all come from cuts, and at least two-thirds of them come from programs serving the poor. The wealthy, meanwhile, would see their taxes lowered, and the Defense Department would escape unscathed. It is not courageous to attack the weak while supporting your party’s most inane and damaging fiscal orthodoxies. But the problem isn’t just that Ryan’s budget is morally questionable. It also wouldn’t work.”

Harold Meyerson, a columnist for the Washington Post wrote on April 5th that “If it does nothing else, the budget that the House Republicans unveiled provides the first real Republican program for the 21st century, and it is this: Repeal the 20th century … Ryan achieves the bulk of his savings through sharp reductions in projected spending on Medicare and Medicaid … Ryan’s budget would also reduce projected spending on discretionary domestic programs—education, transportation, food safety and the like—to well below levels of inflation … The cover under which Ryan and other Republicans operate is their concern for the deficit and national debt. But Ryan blows that cover by proposing to reduce the top income tax rate to just 25 percent. He imposes the burden for reducing our debt not on the bankers who forced our government to spend trillions averting a collapse but on seniors and the poor.”Mr. Meyerson, concludes by saying this: “There’s talk that we have a president who’s a Democrat—the party that created the American social contract of the 20th century. Initially, he focused on reshaping and extending that contract into the 21st. Now that the Republicans want to repeal it all, he’s nowhere to be found. Has anybody seen him? Does he still exist?”

Mr. President, the deficit has been caused by unpaid-for wars, tax breaks for the rich, the Medicare Part D prescription drug program, the bailout of Wall Street, a declining economy, and less revenue coming in. The Republican “solution” in Washington is to balance the budget on the backs of the sick, the elderly, the children and the poor, to cut back on environmental protection, to cut back on transportation, while providing even more tax breaks to the wealthy and well connected. That is unacceptable and that is what we have got to stop.

Mr. President, it’s not just rich individuals who are making out like bandits. As hard as it may be to believe, some of the largest, most profitable corporations in this country are not only avoiding paying any federal income taxes whatsoever, but they are actually receiving tax rebates from the IRS. And, the Republican response to this reality is to provide even more tax breaks to these corporate freeloaders. That may make sense to someone. It does not make sense to me.

Earlier this year, my office published a top ten list of the worst corporate tax avoiders in this country. I would like to take this opportunity to read this list. These are just a few of the corporations that the Republicans want to protect, while they are trying to deny millions of Americans health insurance, a college education, and nutrition assistance. Here are the top ten corporate freeloaders in America today:

1) Exxon Mobil. In 2009, Exxon Mobil made $19 billion in profits. Not only did Exxon avoid paying any federal income taxes that year, it actually received a $156 million rebate from the IRS, according to its SEC filings.2) Bank of America. Last year, Bank of America received a $1.9 billion tax refund from the IRS, even though it made $4.4 billion in profits and just a couple of years ago received a bailout from the Federal Reserve and the Treasury Department of nearly $1 trillion.3) General Electric. Over the past five years, while General Electric made $26 billion in profits in the United States, it received a $4.1 billion refund from the IRS.4) Chevron. In 2009, Chevron received a $19 million refund from the IRS after it made $10 billion in profits.5) Boeing. Last year, Boeing, which received a $30 billion contract from the Pentagon to build 179 airborne tankers, got a $124 million refund from the IRS.6) Valero Energy. Last year, Valero Energy, the 25th largest company in America with $68 billion in sales last year received a $157 million tax refund check from the IRS and, over the past three years, it received a $134 million tax break from the oil and gas manufacturing tax deduction.7) Goldman Sachs. In 2008, Goldman Sachs paid only 1.1 percent of its income in taxes even though it earned a profit of $2.3 billion and received an almost $800 billion bailout from the Federal Reserve and U.S. Treasury Department.8) Citigroup. Last year, Citigroup made more than $4 billion in profits but paid no federal income taxes, even though it received a $2.5 trillion bailout from the Federal Reserve and U.S. Treasury.9) ConocoPhillips. ConocoPhillips, the fifth largest oil company in the United States, made $16 billion in profits from 2007 through 2009, but received $451 million in tax breaks through the oil and gas manufacturing deduction during those years.10) Carnival Cruise Lines. Over the past five years, Carnival Cruise Lines made more than $11 billion in profits, but its federal income tax rate during those years was just 1.1 percent.

In other words, Mr. President, at a time when major corporations such as General Electric and ExxonMobil make billions of dollars in profit, and pay nothing in federal income taxes, the Republican plan is to provide them with even more tax breaks.

Mr. President, large corporations are sitting on a record-breaking $2 trillion in cash. The problem is not that corporations are taxed too much. The problem is that consumers don’t have enough money to buy their products and the Republican agenda would make that far worse.

Corporate tax revenue last year was down by 27% compared to 2000, even though corporate profits are up 60 percent over the last decade.

Large corporations and the wealthy are avoiding $100 billion in taxes every year by setting up offshore tax shelters in places like the Cayman Islands, Bermuda and the Bahamas. Ending that anti-American shell game could raise $1 trillion over 10 years toward deficit reduction.

In 2005, 1 out of 4 large corporations paid no income taxes at all even though they collected $1.1 trillion in revenue. The simple truth is that if we are going to reduce the deficit in a responsible way, we have got to make sure that profitable corporations pay their fair share.Now, I understand that my Republican friends, and quite frankly some of my Democratic friends, will do everything they can to protect the wealthy and the powerful, even if it means destroying the lives of millions of Americans in the process.

But, what we need to understand, what the President needs to understand, is that poll after poll after poll shows that the Republican plan to make savage cuts to Medicare, Medicaid and education, while providing even more tax breaks to the wealthy and large corporations, is way out of touch with what the American people want.

Let me just read to you a few of these polls.

According to a recent Boston Globe poll of likely voters in New Hampshire, perhaps the most anti-tax state in this country, 73% support raising taxes on people making over $250,000 a year; 78%oppose cutting Medicare; 71% oppose cutting Medicaid; and 76% oppose cutting Social Security.

Now, Mr. President, you may be saying to yourself well, that was just one poll, and it was only polling one state. Clearly, that must have been an aberration. Wrong. National poll after national poll have almost mirrored what New Hampshire voters are saying.

A recent NBC News/Wall Street Journal poll found the following:* 81 percent of the American people believe it is totally acceptable or mostly acceptable to impose a surtax on millionaires to reduce the deficit.* 74 percent of the American people believe it is totally acceptable or mostly acceptable to eliminate tax credits for the oil and gas industry.* 68 percent of the American people believe it is totally acceptable or mostly acceptable to phase out the Bush tax cuts for families earning over $250,000 a year.* 76 percent of the American people believe it is totally acceptable or mostly acceptable to eliminate funding for weapons systems the Defense Department says are not necessary.* 76 percent believe it is totally unacceptable or mostly unacceptable to cut Medicare to significantly reduce the budget deficit.* 77 percent believe it is totally unacceptable or mostly unacceptable to cut Social Security to significantly reduce the deficit.* 67 percent believe it is totally unacceptable or mostly unacceptable to cut Medicaid to significantly reduce the deficit.* 77 percent believe it is totally unacceptable or mostly unacceptable to cut funding for K-12 education to significantly reduce the deficit.* 56 percent believe it is totally unacceptable or mostly unacceptable to cut Head Start.* 59 percent believe it is totally unacceptable or mostly unacceptable to cut college student loans.* And, 65 percent believe it is totally unacceptable or mostly unacceptable to cut heating assistance to low income families.And, while the leaders of the Tea Party movement in Washington are fighting to dismantle Medicare and Medicaid and getting the vast majority of Republicans in Congress to follow their marching orders, 70% of those who identify themselves with the Tea Party outside of the beltway oppose cutting Medicare and Medicaid to reduce the deficit, according to a recent McClatchy Poll.

Mr. President, here is the last poll I would like to highlight. It was done by the Washington Post and ABC News, and here is what it says:

* 72% of Americans support raising taxes on incomes over $250,000 to reduce the national debt—including 91% of Democrats; 68% of Independents; and 54% of Republicans.

Yet, Mr. President, there does not seem to be one Republican in Washington, DC, who would support raising taxes on the wealthiest two percent of Americans—those earning over $250,000 a year to reduce the deficit. Only in Washington is it considered a controversial idea to make the wealthy and large corporations pay their fair share.

Instead of listening to millionaire and billionaire campaign contributors, it is time for our leaders in Washington to start listening to the overwhelming majority of Americans who want the wealthiest people in this country and the most profitable corporations in this country to contribute to deficit reduction. It is time for shared sacrifice. The middle class, the elderly, the sick, the children, and the poor have already sacrificed enough in terms of lost jobs, lost wages, lost pensions, and lost homes. When are the wealthiest Americans and most profitable corporations going to be asked to pay their fair share? If not now, when?

And, the fact of the matter is, Mr. President, that moving towards deficit reduction in a way that’s fair is not quite as complicated as the American people have been led to believe by the corporate media and right wing think tanks.

In fact, if you are not beholden to Wall Street, large corporations and wealthy campaign contributors, and you are not scared to death of the unlimited number of 30 second ads they may run against you, it is actually quite easy.

I know many people have different ideas about how we might move towards a balanced budget. I am not saying that I have all of the answers. But, let me just give a few examples of how we can reduce the deficit by more than $4 trillion dollars over the next decade that asks the wealthy and large corporations to pay their fair share and does not unfairly harm ordinary Americans.

First, if we simply repealed the Bush tax breaks for the top two percent, we could raise at least $700 billion over the next decade. The Republicans claim that repealing these tax breaks would increase unemployment. They are wrong. These tax breaks have been in place for over a decade and they have not led to a single net private sector job. In fact, under the eight years of President Bush, the private sector lost over 600,000 jobs and the deficit exploded. When President Clinton increased taxes on the top two percent, over 22 million jobs were created, and the revenue generated from this policy led to a $236 billion budget surplus.

Secondly, a 5.4 percent surtax on millionaires and billionaires would raise more than $383 billion over 10 years, according to the Joint Tax Committee. As I said earlier, a millionaire’s surtax has the support of 81 percent of the American people according to NBC News and the Wall Street Journal.

Third, Mr. President, the U.S. government is actually rewarding companies that move U.S. manufacturing jobs overseas through loopholes in the tax code known as deferral and foreign source income. This is unacceptable. During the last decade, the U.S. lost about 30% of its manufacturing jobs and over 50,000 factories have been shut down.

If we ended the absurdity of providing tax breaks to companies that ship jobs overseas, the Joint Tax Committee has estimated that we could raise more than $582 billion in revenue over the next ten years. Right now we have a tax policy that says that if you shut down a manufacturing plant in America, and move to China, the IRS will give you a tax break. That may make sense to corporate CEOs. It doesn’t make sense to me.

Fourth, Mr. President, if we ended tax breaks and subsidies for big oil and gas companies, we could reduce the deficit by more than $40 billion over the next ten years. The five largest oil companies in the United States have earned about $1 trillion in profits over the past decade. Meanwhile, in recent years, some of the very largest oil companies in America like Exxon Mobil and Chevron, as I pointed out earlier, have paid absolutely nothing in Federal income taxes. In fact, some of them have actually gotten a rebate from the IRS. That has got to stop.

Fifth, Mr. President, if we prohibited abusive and illegal offshore tax shelters, we could reduce the deficit by up to $1 trillion over the next decade. Each and every year, the United States loses an estimated $100 billion in tax revenues due to offshore tax abuses by the wealthy and large corporations. The situation has become so absurd that one five-story office building in the Cayman Islands is now the “home” to more than 18,000 corporations. That is wrong. The wealthy and large corporations should not be allowed to avoid paying taxes by setting up tax shelters in the Cayman Islands, Bermuda, the Bahamas or other tax haven countries.

Sixth, Mr. President, if we established a Wall Street speculation fee of less than one percent on the sale and purchase of credit default swaps, derivatives, stock options and futures, we could reduce the deficit by more than $100 billion over the next decade. Both the economic crisis and the deficit crisis are a direct result of the greed and recklessness on Wall Street. Establishing a speculation fee would reduce gambling on Wall Street, encourage the financial sector to invest in the productive economy, and significantly reduce the deficit without harming average Americans.

There are a number of precedents for this. The U.S had a similar Wall Street speculation fee from 1914 to 1966. The Revenue Act of 1914 levied a 0.2% tax on all sales or transfers of stock. In 1932, Congress more than doubled that tax to help finance the government during the Great Depression. And today, England has a financial transaction tax of 0.25 percent, a penny on every $4 invested.

Number seven, Mr. President, if we taxed capital gains and dividends, the same way that we tax work, we could raise more than $730 billion over the next decade. Warren Buffet has often said that he pays a lower effective tax rate than his secretary. And, today the effective tax rate of the richest 400 Americans, who earn an average of more than $280 million each year, is just 18 percent, lower than most nurses, teachers, firefighters, and police officers pay. The reason for this is that the wealthy obtain most of their income from capital gains and dividends, which is taxed at a much lower rate than work. Right now, the top marginal income tax for working is 35%, but the tax rate on corporate dividends and capital gains is only 15%. Taxing wealth and work at the same rate could raise more than $730 billion over a ten-year period—and it’s the right thing to do.

Number eight, if we established a progressive estate tax on inherited wealth of more than $3.5 million, we could raise more than $70 billion over 10 years. Last year, I introduced the Responsible Estate Tax Act that would reduce the deficit in a fair way while ensuring that 99.7 percent of Americans who lose a loved one would never have to pay a dime in federal estate taxes.

Number nine, we have got to reduce unnecessary and wasteful spending at the Pentagon, which now consumes over half of our discretionary budget. Since 1997, our defense budget has virtually tripled going from $254 billion to $700 billion.

Defense experts such as Lawrence Korb, an Assistant Secretary of Defense under Ronald Reagan, has estimated that we could achieve significant savings of around $100 billion a year at the Pentagon while still ensuring that the United States has the strongest and most powerful military in the world.

For example, as a result of four separate investigations that I requested, the GAO has found that the Pentagon has $36.9 billion in spare parts that it does not need and which are collecting dust in government warehouses. We have got to do a much better job than that.

And, much of the huge spending at the Pentagon is devoted to spending money on Cold War weapons programs to fight a Soviet Union that no longer exists. That has got to stop.

Further, we also must end the unnecessary War in Iraq and the War in Afghanistan as soon as possible. These wars have gone on long enough. Reducing Pentagon spending by at least $900 billion over 10 years is something that we can and must do.

Number 10, if we required Medicare to negotiate for lower prescription drug prices with the pharmaceutical industry, we could save over $157 billion over 10 years. As a result of the Medicare Part D prescription drug legislation signed into law under President George W. Bush, Medicare is prohibited from negotiating with the pharmaceutical industry to lower drug prices for seniors. This is wrong. Requiring Medicare to negotiate for lower drug prices could save the federal government and seniors over $15 billion a year.

Number 11, if we enacted a robust public option or a Medicare-for-all health insurance program, we would be able to save more than $68 billion over the next decade and provide affordable health insurance coverage for millions of Americans.

Number 12, Mr. President, as almost everyone knows, China is manipulating its currency, giving it an unfair trade advantage over the United States and destroying decent paying manufacturing jobs in the process. If we imposed a currency manipulation fee on China and other low wage countries, the Economic Policy Institute has estimated that we could raise $500 billion over 10 years and create 1 million jobs in the process.

Finally, Mr. President, I think just about everyone agrees that there is waste, fraud, and abuse in every agency of the federal government. Rooting out this waste, fraud, and abuse could save about $200 billion over the next 10 years.

Mr. President, if we did all of these things we could easily reduce the deficit by well over $4 trillion over the next decade, if not much more. It would be done in a fair way, and it would not unnecessarily and needlessly ruin the lives of millions of Americans who are struggling desperately just to make ends meet.

Mr. President, the radical right wing agenda of more tax breaks for the wealthy paid for by the dismantling of Medicare, Medicaid, education, nutrition, and the environment may be popular in the country clubs and cocktail parties of the rich and powerful, but it is way out of touch with what the overwhelming majority of Americans want.

Mr. President, as you know, late last week, Congressman Eric Cantor, the Republican Majority Leader in the House and Senator Jon Kyl, the Republican Minority Whip in the House walked out of the budget negotiations being led by Vice President Joe Biden.

And, the reason they walked out was clear. They were not willing to close one single loophole in the tax code that allows the wealthy and large corporations to avoid paying taxes by stashing their money in the Cayman Islands. They were unwilling to stop tax breaks for companies that ship jobs overseas, or close tax loopholes that give billionaires like Warren Buffet the ability to pay lower effective tax rates than their secretaries.

There is apparently no end as to how far the Republican leadership will go in Washington to protect their wealthy campaign contributors, even if it means allowing the federal debt limit to expire and causing another depression.

My sincere hope is that the President will use this Republican walkout as an opportunity to rally the American people and make it clear that he will never support Republican demands to move toward a balanced budget solely on the backs of working families, the elderly, the children, the sick, and the poor.

But, I don’t think that the President will do this unless the American people send him a message that enough is enough! The American people have got to write to the President and tell him not to balance the budget on the backs of the most vulnerable people in this country. Do not decimate Medicare, Medicaid, Pell Grants, education, and the environment to pay for more tax breaks for the rich and powerful. Stand up for the millions, who have seen their homes, jobs, and savings vanish, instead of the millionaires, who have never had it so good.

For those of you who are listening to this speech, if you believe that enough is enough, if you believe in shared sacrifice, if you believe that it is time for the wealthiest Americans and most profitable corporations to contribute to deficit reduction, go to my website: sanders.senate.gov. At this website, you will find a letter to the White House that you can sign—let me read what it says:

“Dear Mr. President,This is a pivotal moment in the history of our country. Decisions are being made about the national budget that will impact the lives of virtually every American for decades to come. As we address the issue of deficit reduction we must not ignore the painful economic reality of today—which is that the wealthiest people in our country and the largest corporations are doing phenomenally well while the middle class is collapsing and poverty is increasing. In fact, the United States today has, by far, the most unequal distribution of wealth and income of any major country on earth.Everyone understands that over the long-term we have got to reduce the deficit—a deficit that was caused mainly by Wall Street greed, tax breaks for the rich, two wars, and a prescription drug program written by the drug and insurance companies. It is absolutely imperative, however, that as we go forward with deficit reduction we completely reject the Republican approach that demands savage cuts in desperately-needed programs for working families, the elderly, the sick, our children and the poor, while not asking the wealthiest among us to contribute one penny. Mr. President, please listen to the overwhelming majority of the American people who believe that deficit reduction must be about shared sacrifice. The wealthiest Americans and the most profitable corporations in this country must pay their fair share. At least 50 percent of any deficit reduction package must come from revenue raised by ending tax breaks for the wealthy and eliminating tax loopholes that benefit large, profitable corporations and Wall Street financial institutions. A sensible deficit reduction package must also include significant cuts to unnecessary and wasteful Pentagon spending.Please do not yield to outrageous Republican demands that would greatly increase suffering for the weakest and most vulnerable members of our society. Now is the time to stand with the tens of millions of Americans who are struggling to survive economically, not with the millionaires and billionaires who have never had it so good.”

If you’re listening out there, and agree with what I am saying, but are wondering what you can do to make a difference, I would urge you to consider signing this letter. Staying silent and doing nothing is not an option. Your voice needs to be heard and you can make a difference.

Mr. President, we have seen this movie before. The Republicans, led by their extreme right wing, have been successful in getting their way because of their refusal to compromise and their willingness to hold the good credit and economic security of the American people hostage.

In December, the Republican leadership was prepared to hold the middle class tax cuts and unemployment benefits hostage in order to extend the Bush tax breaks for the top two percent. The Republicans won and as a result over $200 billion was added to the deficit over the next two years.

Specifically, the December tax cut agreement extended the Bush income tax rates for those earning more than $250,000; maintained lower tax rates on capital gains and dividends; and lowered the estate tax which only benefits the top 0.3 percent.

Let me remind, my colleagues who the biggest winners were from last December’s tax cut agreement.

According to Citizens for Tax Justice, extending the Bush tax breaks for the top 2 percent has provided Rupert Murdoch, the CEO of News Corporation, with an estimated $1.3 million tax break.

Tom Donohue, the head of the U.S. Chamber of Commerce, who has urged American corporations to ship jobs overseas, will receive an estimated $215,000 tax break from this deal.

Jamie Dimon, the head of JP Morgan Chase, whose bank received a bailout of over $160 billion from the Federal Reserve, will receive an estimated $1.1 million tax break from this deal.

Vikram Pandit, the CEO of Citigroup, a bank that got more than $2.5 trillion in near zero interest loans from the Fed, will receive an estimated $785,000 tax break by extending the Bush tax cuts.

Ken Lewis, the former CEO of Bank of America, a bank that got nearly a trillion dollars in low interest loans from the Fed, will receive an estimated $713,000 tax break.

The CEO of Wells Fargo (John Stumpf), whose bank got a $25 billion bailout, will receive an $813,000 tax break from this deal.

The CEO of Morgan Stanley (John Mack), whose bank got more than $2 trillion in low interest loans from the Fed, will receive a $926,000 tax break from this agreement.

The CEO of Aetna (Ronald Williams) will receive a tax break worth $875,000.

The CEO of Cigna (David Cordani) will receive a $350,000 tax break. And, on and on it goes.

The rich get richer, the poor get poorer, and the middle class disappears. That is what is going on in this country today.

Then, Mr. President, In April, the Republicans in Congress were prepared to shut down the government, disrupt the economy, and deny paychecks to 800,000 federal workers if they couldn’t get their way in slashing programs for low and moderate income Americans. As a result, the President and this Congress agreed to virtually everything the Republicans wanted by enacting a budget thatslashed $78 billion from the President’s request.

Let me give you just a few examples of what kinds of cuts were included in this year’s spending agreement:

At a time when college education has become unaffordable for many, Pell grants are now being reduced by an estimated $35 billion over 10 years.

At a time when 50 million Americans have no health insurance, at a time when we have a crisis in access to primary care, and at a time when 45,000 Americans die each and every year because they delay seeking care they cannot afford, the 2011 spending agreement cut $600 million from community health centers and $3.5 billion from the Children’s Health Insurance Program.

At a time when we should be putting Americans to work rebuilding our crumbling infrastructure, federal funding for new high-speed rail projects was eliminated. In other words, the rich get richer, while the needs of ordinary Americans are attacked.

And, today, the Republican Leadership has made it clear that, unless they get their way on implementing a significant part of the Ryan budget in 2012, they are prepared to vote against raising the debt ceiling. If the debt ceiling is not extended, the United States will, for the first time in history, default on its debt and likely plunge the world’s financial markets into a major crisis. Yet that is just what the Republican leadership and its members are threatening to do. Shame on them.

Mr. President, in many ways, the Republicans in Washington have been acting like school yard bullies. And, as we know, bullying is a serious problem in our schools. Every educator worth his or her salt will tell you that when you’re dealing with a bully, you must not give into their tactics or tolerate their temper tantrums—you have to deal with them sternly and consistently. You cannot allow them to win by dictating the rules of the game and trampling over everyone else if they don’t get their way.

Mr. President, we have a serious deficit problem that must be solved, no one would deny it.But the problem is not that we spend too much on the needs of the elderly and have to slash Social Security; the problem is that we have provided hundreds of billions in tax breaks to millionaires and billionaires who don’t need them and in many cases don’t want them.

The problem is not that we spend too much money on financial aid for college and have to slash Pell Grants. The average college senior today is graduating with $24,000 in debt. The problem is that each and every year, large corporations and the wealthiest in our society are avoiding $100 billion in federal taxes through tax shelters in the Cayman Islands, Bermuda and other places throughout the world.

The problem is not that we are spending too much on childcare. Childcare is increasingly becoming out of reach for too many American families. The problem is that about one out of four large and profitable corporations in this country do not pay any federal income taxes, and in many cases get a tax rebate from the IRS.The problem is not that we spend too much money to reduce childhood poverty in this country. We have the highest childhood poverty rate in the industrialized world! The problem is that when all is said and done we will have spent $3 trillion on the unnecessary and misguided Iraq War.

Mr. President, the problem is that this deficit was caused by actions voted for by nearly all of my Republican friends: the wars, tax breaks for the rich, Medicare Part D, and the Wall Street Bailout. In the middle of a recession when the middle class and working families are already hurting, when poverty is increasing it is not only immoral, it is bad economics to balance the budget on working families and the most vulnerable people in this country.

When people are hurting, when they have lost their jobs, when their incomes are going down, you do not say to those people: We are throwing you off Medicaid. We are going to end Medicare as we know it, we are going to cut back on Federal aid to education so your kid cannot go to college. That is not what you say in a humane and fair society.

On the other hand, at the same time as the wealthiest people are becoming phenomenally wealthier, and when large corporations are making huge profits, and in many cases not paying any taxes at all, it is entirely appropriate—in fact, it is a moral imperative—to say to those people: Sorry, you are also American. You have got to participate in shared sacrifice. You have also got to help us reduce the deficit.

That is where we are right now. We are at a pivotal moment in the midst of a major debate, but it is not only on financial issues. It is very much a philosophical debate. It is a debate about which side you are on. Do you continue to give tax breaks to the very rich and make savage cuts for working families, for children, the elderly, the poor, the most vulnerable?

Mr. President, another thing that is rarely mentioned on the floor of the Senate is the $3 trillion Federal Reserve bailout, that was only fully made public after I inserted an amendment into the Dodd-Frank Act last year to require that it be made public.

As it turns out, while small business owners in the State of Vermont and throughout this country were being turned down for loans, not only did large financial institutions receive substantial help from the Fed, but also some of the largest corporations in this country also received help in terms of very low interest loans.

And, here is something we also learned: this bailout was not just about American banks and corporations but foreign banks and foreign corporations also received hundreds of billions of dollars from the Fed as well.

Then, on top of that, a number of the wealthiest individuals in this country also received a major bailout from the Fed. The “emergency response,” which is what the Fed described their action as during the Wall Street collapse, appears to any objective observer to have been the clearest case that I can imagine of socialism for the very rich and rugged free market individualism for everybody else.

In other words, if you are a huge financial institution, like Goldman Sachs, whose recklessness and greed caused this great recession, no problem. You get almost $800 bilion in near zero interest rate loans from the Fed. If you are a major American corporation, such as General Electric or McDonald’s or Caterpillar or Harley-Davidson or Verizon, no problem. You received a major handout from the U.S. Government.

But if you are a senior citizen living in a nursing home paid for by Medicaid, well, guess what, you are on your own.

If you are an elderly person who cannot afford to heat their homes in the winter when the temperature is 20 below zero, tough luck. We don’t have any money for you. But, if you happen to be the state-owned Bank of Bavaria—not Pennsylvania, not California, but Bavaria—the Federal Reserve has enough money to loan you over $2.2 billion by purchasing your commercial paper.

The Fed said this bailout was necessary in order to prevent the world economy from going over a cliff. But over 3 years after the start of the recession, millions of Americans remain unemployed and have lost their homes, their life savings, and their ability to send their kids to college. Meanwhile, huge banks and large corporations have returned to making incredible profits and paying their executives record-breaking compensation packages, as if the financial crisis they started never occurred.

Mr. President, everyone understands that over the long-term we have got to reduce our record-breaking $14.2 trillion national debt. But, we must reduce the deficit in a fair way and not balance the budget solely on the backs of the middle class, the sick, the elderly, the children and the poor.

That means we absolutely must tell the wealthy and large corporations that it is high time that they to pay their fair share in taxes. And, that means that the President has got to stand tall and stand firm and let the American people know that if we do default on our debt obligations, if America and the world economy is plunged into a depression, it was because the Republicans refused to raise the taxes of the wealthiest Americans and most profitable corporations in this country by one red cent.

Shared sacrifice isn’t just good public policy, it is also what the American people want. Overwhelming majorities of the American people believe that the best way to reduce the deficit is to end tax breaks for the wealthy, big oil, Wall Street, and that we must bring our troops home from Afghanistan and Iraq.

It’s about time that Washington listened to the American people. Let’s reduce the deficit. But, let’s do it in a fair and responsible way that requires shared sacrifice from the wealthiest Americans and most profitable corporations.

July 29, 2011

A friend who’s been watching the absurd machinations in Congress asked me “what happens if we don’t solve the budget crisis and we run out of money to pay the nation’s bills?”

It was only then I realized how effective Republicans lies have been. That we’re calling it a “budget crisis” and worrying that if we don’t “solve” it we can’t pay our nation’s bills is testament to how successful Republicans have been distorting the truth.

The federal budget deficit has no economic relationship to the debt limit. Republicans have linked the two, and the Administration has played along, but they are entirely separate. Republicans are using what would otherwise be a routine, legally technical vote to raise the debt limit as a means of holding the nation hostage to their own political goal of shrinking the size of the federal government.

In economic terms, we will not “run out of money” next week. We’re still the richest nation in the world, and the Federal Reserve has unlimited capacity to print money.

Nor is there any economic imperative to reach an agreement on how to fix the budget deficit by Tuesday. It’s not even clear the federal budget needs that much fixing anyway.

Yes, the ratio of the national debt to the total economy is high relative to what it’s been. But it’s not nearly as high as it was after World War II – when it reached 120 percent of the economy’s total output.

If and when the economy begins to grow faster – if more Americans get jobs, and we move toward a full recovery – the debt/GDP ratio will fall, as it did in the 1950s, and as it does in every solid recovery. Revenues will pour into the Treasury, and much of the current “budget crisis” will be evaporate.

Get it? We’re really in a “jobs and growth” crisis – not a budget crisis.

And the best way to get jobs and growth back is for the federal government to spend more right now, not less – for example, by exempting the first $20,000 of income from payroll taxes this year and next, recreating a WPA and Civilian Conservation Corps, creating an infrastructure bank, providing tax incentives for small businesses to hire, expanding the Earned Income Tax Credit, and so on.

But what happens next week if Congress can’t or won’t deliver the President a bill to raise the debt ceiling? Remember: This is all politics, mixed in with legal technicalities. Economics has nothing to do with it.

One possibility, therefore, is for the Treasury to keep paying the nation’s bills regardless. It would continue to issue Treasury bills, which are our nation’s IOUs. When those IOUs are cashed at the Federal Reserve Board, the Fed would do what it has always done: Honor them.

How long could this go on without the debt ceiling being lifted? That’s a legal question. Republicans in Congress could mount a legal challenge, but no court in its right mind would stop the Fed from honoring the full faith and credit of the United States.

The wild card is what the three big credit-rating agencies will do. As long as the Fed keeps honoring the nation’s IOUs, America’s credit should be deemed sound. We’re not Greece or Portugal, after all. We’ll still be the richest nation in the world, whose currency is the basis for most business transactions in the world.

Standard & Poor’s has warned it will downgrade the nation’s debt from a triple-A to a double-A rating if we don’t tend to the long-term deficit. But, as I’ve noted, S&P has no business meddling in American politics – especially since its own non-feasance was partly responsible for the current size of the federal debt (had it done its job the debt and housing bubbles wouldn’t have precipitated the terrible recession, and the federal outlays it required).

As long as we pay our debts on time, our global creditors should be satisfied. And if they’re satisfied, S&P, Moody’s, and Fitch should be, too.

Repeat after me: The federal deficit is not the nation’s biggest problem. The anemic recovery, huge unemployment, falling wages, and declining home prices are bigger problems. We don’t have a budget crisis. We have a jobs and growth crisis.

The GOP has manufactured a budget crisis out of the Republicans’ extortionate demands over raising the debt limit. They have succeeded in hoodwinking the public, including my friend.

July 26, 2011

One universe is the one in which most Americans live. In it, almost 15 million people are unemployed, wages are declining (adjusted for inflation), and home values are still falling. The unsurprising result is consumers aren’t buying — which is causing employers to slow down their hiring and in many cases lay off more of their workers. In this universe, we’re locked in a vicious economic cycle that’s getting worse.

The other universe is the one in which Washington politicians live. They are now engaged in a bitter partisan battle over how, and by how much, to reduce the federal budget deficit in order to buy enough votes to lift the debt ceiling.

The two universes have nothing whatever to do with one another — except for one thing. If consumers can’t and won’t buy, and employers won’t hire without customers, the spender of last resort must be government. We’ve understood this since government spending on World War II catapulted America out of the Great Depression — reversing the most vicious of vicious cycles. We’ve understood it in every economic downturn since then.

Until now.

The only way out of the vicious economic cycle is for government to adopt an expansionary fiscal policy — spending more in the short term in order to make up for the shortfall in consumer demand. This would create jobs, which will put money in peoples’ pockets, which they’d then spend, thereby persuading employers to do more hiring. The consequential job growth will also help reduce the long-term ratio of debt to GDP. It’s a win-win.

This is not rocket science. And it’s not difficult for government to do this — through a new WPA or Civilian Conservation Corps, an infrastructure bank, tax incentives for employers to hire, a two-year payroll tax holiday on the first $20K of income, and partial unemployment benefits for those who have lost part-time jobs.

Yet the parallel universe called Washington is moving in exactly the opposite direction. Republicans are proposing to cut the budget deficit this year and next, which will result in more job losses. And Democrats, from the President on down, seem unable or unwilling to present a bold jobs plan to reverse the vicious cycle of unemployment. Instead, they’re busily playing “I can cut the deficit more than you” — trying to hold their Democratic base by calling for $1 of tax increases (mostly on the wealthy) for every $3 of spending cuts.

All of this is making the vicious economic cycle worse — and creating a vicious political cycle to accompany it.

As more and more Americans lose faith that their government can do anything to bring back jobs and wages, they are becoming more susceptible to the Republican’s oft-repeated lie that the problem is government — that if we shrink government, jobs will return, wages will rise, and it will be morning in America again. And as Democrats, from the President on down, refuse to talk about jobs and wages, but instead play the deficit-reduction game, they give even more legitimacy to this lie and more momentum to this vicious political cycle.

The parallel universes are about to crash, and average Americans will be all the worse for it.

July 17, 2011

After a bruising midterm election, the president moves to the political center. He distances himself from his Democratic base. He calls for cuts in Social Security and signs historic legislation ending a major entitlement program. He agrees to balance the budget with major cuts in domestic discretionary spending. He has a showdown with Republicans who threaten to bring government to its knees if their budget demands aren’t met. He wins the showdown, successfully painting them as radicals. He goes on to win re-election.

Barack Obama in 2012? Maybe. But the president who actually did it was Bill Clinton. (The program he ended was Title IV of the Social Security Act, Aid to Families with Dependent Children.)

It’s no accident that President Obama appears to be following the Clinton script. After all, it worked. Despite a 1994 midterm election that delivered Congress to the GOP and was widely seen as a repudiation of his presidency, President Clinton went on to win re-election. And many of Mr. Obama’s top aides—including Chief of Staff Bill Daley, National Economic Council head Gene Sperling and Pentagon chief Leon Panetta—are Clinton veterans who know the 1995-96 story line by heart.

Republicans have obligingly been playing their parts this time. In the fall of 1995, Speaker Newt Gingrich was the firebrand, making budget demands that the public interpreted as causing two government shutdowns—while President Clinton appeared to be the great compromiser. This time it’s House Majority Leader Eric Cantor and his Republican allies who appear unwilling to bend and risk defaulting on the nation’s bills—while President Obama offers to cut Social Security and reduce $3 of spending for every dollar of tax increase.

And with Moody’s threatening to downgrade the nation’s debt if the debt limit isn’t raised soon, Republicans appear all the more radical.

So will Barack Obama pull a Bill Clinton? His real problem is one Mr. Clinton didn’t have to contend with: a continuing terrible economy. The recession in 1991-92 was relatively mild, and by the spring of 1995, the economy was averaging 200,000 new jobs per month. By early 1996, it was roaring—with 434,000 new jobs added in February alone.

I remember suggesting to Mr. Clinton’s then-political adviser, Dick Morris, that the president come up with some new policy ideas for the election. Mr. Morris wasn’t interested. The election will be about the economy—nothing more, nothing less, he said. He knew voters didn’t care much about policy. They cared about jobs.

President Obama isn’t as fortunate. The economy remains hampered by the Great Recession, brought on not by overshooting by the Federal Reserve but by the bursting of a giant housing bubble. As such, the downturn has proven resistant to reversal by low interest rates. The Fed has kept interest rates near zero for more than two years, opened the spigots of its discount window, and undertaken two rounds of quantitative easing—all with little to show for it.

Some in the White House and on Wall Street assume the anemic recovery will turn stronger in the second half of the year, emerging full strength in 2012. They blame the anemia on disruptions in Japanese supply chains, bad weather, high oil prices, European debt crises, and whatever else they can come up with. These factors have contributed, but they’re not the big story.

When the Great Recession wiped out $7.8 trillion of home values, it crushed the nest eggs and eliminated the collateral of America’s middle class. As a result, consumer spending has been decimated. Households have been forced to reduce their debt to 115% of disposable personal income from 130% in 2007, and there’s more to come. Household debt averaged 75% of personal income between 1975 and 2000.

We’re in a vicious cycle in which job and wage losses further reduce Americans’ willingness to spend, which further slows the economy. Job growth has effectively stopped. The fraction of the population now working (58.2%) is near a 25-year low—lower than it was when recession officially ended in June 2009.

Wage growth has stopped as well. Average real hourly earnings for all employees declined by 1.1% between June 2009, when the recovery began, and May 2011. For the first time since World War II, there has been a decline in aggregate wages and salaries over seven quarters of post-recession recovery.

This is not Bill Clinton’s economy. So many jobs have been lost since Mr. Obama was elected that, even if job growth were to match the extraordinary pace of the late 1990s—averaging 300,000 to 350,000 per month—the unemployment rate wouldn’t fall below 6% until 2016. That pace of job growth is unlikely, to say the least. If Republicans manage to cut federal spending significantly between now and Election Day, while state outlays continue to shrink, the certain result is continued high unemployment and anemic growth.

So Mr. Obama’s challenge in 2012 has nothing to do with Mr. Clinton’s in 1996. Most Americans care far more about jobs and wages than they do about budget deficits and debt ceilings. Even if Mr. Obama is seen to win the contest over raising the debt limit and succeeds in painting Republicans as radicals, he risks losing the upcoming election unless he directly addresses the horrendous employment problem.

How can he do this while continuing to appear more reasonable than Republicans on the deficit? By coming up with a bold jobs plan that would increase outlays over the next year or two but would credibly begin a long-term plan to shrink the budget. To the extent the jobs plan spurs growth, the long-term ratio of debt to GDP will improve.

Elements of the plan might include putting more money into peoples’ pockets by exempting the first $20,000 of income from payroll taxes for the next year, recreating a Works Progress Administration and Civilian Conservation Corps to employ the long-term jobless, creating an infrastructure bank to finance improvements to roads and bridges, enacting partial unemployment benefits for those who have been laid off from part-time jobs, and giving employers tax credits for net new hires.

The fight over the debt ceiling will be over very soon. Most Washington hands know it will be raised. Political tacticians know President Obama will likely appear to win the battle, and his apparent move to the center will make Republicans look like radicals. But the Clinton script will take the president only so far. If he wants a second term, he’ll have to come out swinging on jobs.

July 12, 2011

What did the President do in response to last week’s horrendous job report — unemployment rising to 9.2 percent in June, with only 18,000 new jobs (125,000 are needed each month just to keep up with the growth in the potential labor force)?

He said the economy continues to be in a deep hole, and he urged Congress to extend the temporary reduction in the employee part of the payroll tax, approve pending free-trade agreements, and pass a measure to streamline patent procedures.

To call this inadequate would be a gross understatement.

Here’s what the President should have said:

This job recession shows no sign of ending. It can no longer be blamed on supply-side disruptions from Japan, Europe’s debt crisis, high oil prices, or bad weather.

We’re in a vicious cycle where consumers won’t buy more because they’re scared of losing their jobs and their pay is dropping. And businesses won’t hire because they don’t have enough customers.

Here in Washington, we’ve been wasting time in a game of chicken over raising the debt ceiling. Republicans want you to believe the deficit is responsible for the bad economy. The truth is that when the private sector cannot and will not spend enough to get the economy going, the public sector must step into the breach. Cutting the deficit now would only create more joblessness.

My first priority is to get Americans back to work. I’m proposing a jobs plan that will do that.

First, we’ll exempt the first $20,000 of income from payroll taxes for the next two years. This will put cash directly into American’s pockets and boost consumer spending. We’ll make up the revenue shortfall by applying Social Security taxes to incomes over $500,000.

Second, we’ll recreate the WPA and Civilian Conservation Corps — two of the most successful job innovations of the New Deal – and put people back to work directly. The long-term unemployed will help rebuild our roads and bridges, ports and levees, and provide needed services in our schools and hospitals. Young people who can’t find jobs will reclaim and improve our national parklands, restore urban parks and public spaces, recycle products and materials, and insulate public buildings and homes.

Third, we’ll enlarge the Earned Income Tax Credit so lower-income Americans have more purchasing power.

Fourth, we’ll lend money to cash-strapped state and local governments so they can rehire teachers, fire fighters, police officers, and others who provide needed public services. This isn’t a bailout. When the economy improves, scheduled federal outlays to these states and locales will drop by an amount necessary to recover the loans.

Fifth, we’ll amend the bankruptcy laws so struggling homeowners can declare bankruptcy on their primary residence. This will give them more bargaining leverage with their lenders to reorganize their mortgage loans. Why should the owners of commercial property and second homes be allowed to include these assets in bankruptcy but not regular home owners?

Sixth, we’ll extend unemployment benefits to millions of Americans who have lost part-time jobs. They’ll get partial benefits proportional to the time they put in on the job.

Yes, most of these measures will require more public spending in the short term. But unless we get this economy moving now, the long-term deficit problem will only grow worse.

Some in Congress will fight against this jobs plan on ideological grounds. They don’t like the idea that government exists to help Americans who need it. And they don’t believe we all benefit when jobs are more plentiful and the economy is growing again.

I am eager to take them on. Average Americans are hurting, and their pain is not going away.

We bailed out Wall Street so that the financial system would not crash. We stimulated the economy so that businesses would not tank. Now we must help ordinary people on the Main Streets of America — for their own sakes, and also so that the real economy can fully mend.

My most important goal is restoring jobs and wages. Those who oppose me must explain why doing nothing is preferable.

July 09, 2011

I have recently written a series of columns about jobs with titles such as "An angry dissent," and today's disastrous numbers are a political game changer. All incumbents of both parties are threatened if jobs are not created in large numbers by Election Day 2012.

This is one of the great outrages in political history. Neither party is now proposing a major jobs program. While the Republican Party at the national and state level is doing everything it can to destroy jobs, the Democratic Party is failing to fight for jobs with the intensity that Democrats have historically done. Meanwhile, the Democratic president does photo-ops, Twitter events and mini-jobs programs of the magnitude of school uniform trivia.

It is an outrage, a crime, a sin against decency and a defamation against everything I personally believe that nobody, I repeat nobody, in the high councils of politics gives a damn about those who have been jobless for 99 weeks. This violates my faith as a Christian, where we are supposed to help those in need. It violates my values as a Democrat, where we are supposed to fight for jobs. It violates the most common-sense economics, which proves that help for 99ers provides more stimulus than tax cuts for the wealthy, but since the 99ers would have to spend the money from assistance, to live.

The president's political brain David Plouffe now suggests that voters will not vote based on the jobless rate. This is ridiculous, absurd, delusional and symptomatic of a president far out of touch with the realities of working-class Americans who is clueless in confronting Republicans who believe in firing police, firefighters, teachers and librarians.

The jobless rate is a scandal.

The plight of the 99ers is a moral outrage.

The disastrous jobless numbers today will add to the political earthquake of a nation that demands jobs and is outraged by Washington power brokers who show no signs of caring, understanding or acting.

Shame on the president. Shame on the Republicans. Shame on the Democrats. Shame on the media. Shame on them all.

It is time to cut the crap, create the jobs and fight like hell for what Americans want: jobs.

I continue my angry dissent today.

The horrendous and disastrous jobs numbers announced this morning are a thunderbolt reminder of the jobless plague that grips our nation.

If the jobs are not created soon there will be more incumbents, from both parties, who will join the jobless after the next change election in 2012.

The big story out of Washington—and rightly so—is the debt-ceiling fight that President Obama seems to be coming very close to losing. If the president abandons his 2008 campaign promise to be an absolute defender of Social Security, Medicare and Medicaid, he will have very little indeed to run on in 2012.

But that won't be what beats him.

Because the biggest story in America is a different one from the biggest story in Washington. Americans are not that into the debt-ceiling debate. Polling has suggested that less than a quarter of Americans are "closely following" the fight. Those numbers will rise a bit as the deadline gets closer and as the media hypes the issue.

The issue that Americans have been following closely, and will continue to follow straight through the 2012 election cycle, the issue that tops the polls on the list of concerns, is the jobs crisis. Americans are worried about unemployment and underemployment.

The 9.2 percent official unemployment rate—up from 9.0 percent two months ago and 9.1 percent a month ago—is only a pale shadow of the real rate. Categorized in official terms as the "U6" unemployment, the real rate includes the offically unemployed as well as Americans who are underemployed and those who have given up on the search for work. It stands at more than 16 percent nationally. And in depressed states, such as Michigan (which Obama carried handily in 2008 but where his approval ratings are now troublingly low), it is well over 20 percent.

The official and the real unemployment rates are devastating. These numbers are some of the worst since the Great Depression. But they are not getting the response that high unemployment rates got from Democrats in the Depression era of other periods of economic downtown in the years since.

President Obama and his team have never focused on job issues with the intensity that is needed. And now they are simply being ridiculous.

Speaking to reporters this week, Plouffe said, “The average American does not view the economy through the prism of GDP or unemployment rates or even monthly jobs numbers. People won’t vote based on the unemployment rate, they’re going to vote based on: ‘How do I feel about my own situation? Do I believe the president makes decisions based on me and my family?’ ”

The almost 10 percent of Americans who are officially unemployed probably don’t feel all that great about their situation. The same goes for the the tens of millions of additional Americans who are underemployed or who have fallen off official radar because they have given up on the search for work in communities where there are simply no jobs to be had.

The unemployed, the underemployed and the abandoned add up to almost one in five Americans. And an awfully lot of them live in battleground states such as Indiana, Michigan, Ohio and Pennsylvania —all of which President Obama won in 2008, all of which President Obama needs to win in 2012.

Now, let’s be clear, no one in their right mind thinks that Republicans who would be president are any more concerned about jobless Americans than is the Obama administration.

But neglecting unemployment as an issue—or presuming, as Plouffe does, that Americans will give Obama the benefit of the doubt—is political madness.

When unemployment reaches the level that it has nationally, and the even higher levels that it has in battleground states, potential Obama voters start losing faith that "the president makes decisions based on me and my family."

Some of the disappointed may still vote for Obama out of fear of the Republicans, some will find social issues that draw them to the Republicans, but millions will simply stay home —as they did in 2010.

That's the danger heading into the 2012 race, and it is more profound today that at any time in Barack Obama's presidency.

Obama is toying with the notion of running for reelection as the president who did what George Bush could not: cut Medicare, Medicaid and Social Security.

That calculus suggests that Obama and his team really are out of touch with the electoral dynamic.

While the president's apparent willingness to take the best argument available to Democrats going into the 2012 election cycle—the promise that they will defend Medicare, Medicaid and Social Security—suggests that Obama learned nothing from the Democratic party's devastating electoral experience in 2010, his top political aide's statements with regard to unemployment suggest that his team has learned even less.

No president since Franklin Roosevelt has won reelection when the unemployment rate was over 7 percent. And Roosevelt won because he ran as a candidate who was fully willing to use the power of the federal government to create jobs —and programs like Social Security.

The notion that a Democratic president can win reelection with an unemployment rate that is edging upward—perhaps toward double digits—and talk of cutting Social Security is not merely unrealistic. It is evidence of a disconnect that could devastate not just Obama's reelection campaign in 2012 but Democratic prospects for years to come.

July 03, 2011

Pennsylvania Gov. Tom Corbett (R) signed a disastrous state budget last night that favors the natural gas industry at the expense of the state’s children and least fortunate citizens. The $27.15 billion budget does not raise taxes, but cuts health care for more than 100,000 of the state’s poorest residents. It did this by slashing Medicaid contributions by $280 million, which will result in a $425 million loss in matching federal funds. State universities and community colleges have announced the largest tuition hikes in state history as education funding took a heavy, $863-million hit.

Yet, state Republicans and Corbett did not have to punish children and the neediest to plug a $4 billion budget deficit. Several variations of natural gas drilling taxes were proposed this year, and an extraction fee tacked onto the budget by the state Senate last week would have raised $310 million. However, Corbett threatened to veto any tax, and he strong-armed the state House into withdrawing a vote on the tax this week just hours before it was scheduled to be debated. Corbett’s obstinacy continues even though Pennsylvania is the only major gas producer that does not tax its use.

So why is Corbett very friendly to natural gas, despite its documented dangers? It may be because the governor owes part of his political career to the industry, having accepted almost $1.3 million in campaign contributions from drillers. The Philadelphia Inquirer reported this week on the cozy relationship between Corbett and Chesapeake Energy, the state’s largest natural gas driller, which began during Corbett’s first statewide campaign for attorney general.

“For much of the fall of 2004, polls showed a slight lead for the Democrat. … Then, in the final weeks of the race, came a game-changer…$450,000 in campaign checks from Aubrey McClendon, CEO and chairman of Chesapeake Energy…The influx of cash helped Corbett narrowly win the closest attorney general’s race in Pennsylvania history and propelled him toward the governor’s mansion, where he has now pledged to turn the Keystone State into ‘the Texas of the natural-gas boom.’”

Chesapeake is one of the worst environmental offenders, having racked up fines of $900,000 and $188,000 in the last few months. They are also currently being sued by the attorney general of Maryland. Despite this, representatives from Chesapeake initially served on Corbett’s Marcellus Shale Advisory Commission. Since his election, Corbett has also favored the industry by lifting a moratorium on new drilling on public lands, and by requiring his office’s approval before any regulations against natural gas companies can be enforced.

June 30, 2011

Everyone is talking about how to get the economy moving again and how to create jobs. President Obama talks about "winning the future." This means more education, more entrepreneurialism, more new industries, more new products for consumers to buy. Surely, all this new economic activity is exactly what we need or is it? Since the GDP of the US is dependent on consumers consuming to the tune of 70% of the entire economy, it stands to reason that for the economy to expand, consumers need to consume more. But wait a minute. We are already stuffed to the gills with products rammed down our throats by TV advertisers. Maybe what we need is less consumption. Americans are already experiencing an epidemic of obesity. We should be consuming less fast food. But that would bring the profits of McDonald's down. They might even have to lay off employees. Their stock might plummet. Wal-Mart offers us a plethora of cheap crap made in China. But if we stopped buying it, Wal-Mart's profits would go down, their stock price would tumble and the Dow Jones average might even find itself in bear market territory. Everyone agrees that this would be terrible for the economy. But it might be good for the citizens.

I say we need to participate less in the market economy and be more self-subsistent. This would result in a decrease in GDP, but an increase in citizen independence. The more we rely on ourselves to fulfill our needs, the less we rely on the market economy and the better off we are when that economy goes kerflooey. The recent economic meltdown was all about Wall Street and their shenanigans. It was of paramount importance to bail out Wall Street and then all good things would follow. Such was the conventional wisdom. Only good things didn't follow. People's homes were foreclosed on en masse even when banks couldn't prove that they held title to the houses. Main Street, the middle class - they were not protected at all. The culprits who caused the crisis were bailed out. The average citizen who lost his job and his house and maybe even his wife was not bailed out at all. In fact Republicans are doubling down on destroying what remains of the safety net which might have helped these unfortunates to maintain the skeleton of a half way decent way of life. Congress has continued to sponsor and uphold legislation that encourages corporations to outsource jobs. The budget is to be balanced on the backs of the poor and middle class and not by asking the rich to contribute a little more. We are rapidly retreating to the Dickensian era where to ask for a little more porridge was to be answered with a "certainly not!"

What we need is not more consumption of cheap Chinese produced crap or even newly minted crap from our own entrepreneurs. What we need is a better system of distributing the immense amount of stuff that we are already capable of producing. And in particular we are in need of a more widely distributed system of ownership so that profits redound to the average citizen and not to the upper .1% who are becoming immensely wealthy far beyond their needs while the poor and middle class are being reduced to penury and poverty. What we need is a government that looks out for the little guy, not one who is all for the competitive struggle to produce more and more goods and win the future that way. How about winning the future by taking back our ability to be self-sustaining? We need to return to an era when people produced a large amount of their own food by growing it themselves instead of relying on the marketplace of consumer provided food by large agricorporations which use pesticides, herbicides and hormones to provide us with food which in most cases will not kill us right away. That will take place in 30-40 years when cancer sets in. But in a lot of cases of e coli and salmonella brought on by filthy conditions for animals in factory farms, it will kill us or sicken us immediately. So profits are concentrated in the hands of a few corporations instead of being widely distributed which would take place if there were widespread family gardening which also produces healthier foods. If everyone farmed to some extent, we would all be better off but GDP and corporate profits would decline because we wouldn't be participating to such a great extent in the market economy.

Sociologists decry the fact that in many parts of the world people are living on $2. a day. But those in this category that are rural may in fact be 98% self-subsistent. In other words they are providing for their own needs without participating in the market economy or are only participating to the tune of $2. a day. On the other hand the urban poor who are living on $2. a day may not be in a position to be self-subsistent, and they are truly poor because they have to meet all their needs by means of the market economy and $2. a day doesn't go very far. Just recently many Americans met probably 75% of their needs without participating in the market economy. Take my grandparents, for example. My Grandfather lived and worked on a small dairy farm. They had chickens and hogs and a large garden. So they provided perhaps 90% or more of their own food instead of buying it at the market. They sold milk into the marketplace in exchange for dollars which they used to purchase what they could not provide for themselves. Instead of buying oil or gas, my grandfather farmed with horses and he grew the fuel that they consumed with the result that he did his own energy production and did not have to depend on Exxon Mobil or Chevron for energy. And as a bonus horses did not pollute. Since chemicals were not available, his farming was organic by default. He learned carpentry and built his own buildings with the result he didn't have to hire a contractor. They were largely self-sufficient and self-subsistent. Of course, they made their own clothes instead of buying them in a store. Women had a whole variety of functions within the household instead of vying for jobs in the marketplace, another way in which they were self-sufficient. They actually weathered the Great Depression quite well since they weren't dependent on the market economy. Even my parents who had government jobs as teachers, the kind that Republicans are attacking today, raised chickens and had a really large garden from which they provided much of their own food. And women used to bake instead of buying prepared foods.

So maybe the answer to the economic malaise that we find ourselves in today will be solved not by creating new industries to manufacture more and better stuff but by figuring out ways to be less dependent on the marketplace and more self-sufficient. Profit centers need to be more widely dispersed instead of profits ending up in the hands of the Fortune 400. Think about it: when you participate in the market economy, the money you spend ends up in the hands of a very few and select group of corporations and wealthy individuals and families. These individuals, families and corporations have effectively captured government through their paid lobbyists so that government operates solely in their interests. Jefferson envisioned a country of independent yeoman, small farmers and craftsmen. In today's America, there are hardly any such people. Instead most rely on a job to provide them with income which they use to provide for all their needs by purchasing goods and services in the marketplace. As more and more people lose their jobs because the jobs are outsourced or are replaced by automated machines, there is no place to go but down. But the self-employed, the self-sufficient and self-subsistent will be able to provide for themselves and their families irregardless of what is happening in the marketplace. Those absolutely dependent on wages to make a living are already becoming neo-serfs needing two or three minimum wage jobs to make a go of it. The worst off are dependent on charity.

June 28, 2011

Why is unemployment so high? Simply put it's because corporations and businesses can produce a surfeit of consumer goods without the need for additional human labor. Since 125,000 new faces enter the work force every month, there should be new jobs created for these people if they are to make a living since most people, but not all, make their living through work. Some, however, the rentier class, make their living from stocks, rent, dividends and interest, but not very many. But the American and even the world - since we're in a global economy - production machine doesn't need additional workers; it needs more consumers. Everything can be produced with a diminishing number of workers. Why? Consider automation, robotization, computerization. In short today machines do most of the work. You only have to watch one of those shows on the Science Channel to appreciate this: "How Stuff is Made." You see that most industrial processes have been completely automated.

Back in the old days production was very labor intensive. Stuff was made by hand. Machines were very primitive or non-existent depending how far you go back. The land was tilled and crops planted by hand whereas today huge tractors and automated farm machinery mean that one man can do the work that was done by hundreds a hundred years ago. What little labor is needed in today's world can easily be outsourced to wherever labor is cheapest. We have gone from an economy which was very labor intensive, one that required a lot of hands for the production of goods, to one that requires very little labor to keep the machines and robots humming. And the process of mechanizing and automating production processes continues. Robots are getting ever smarter.

So where does that leave the average person who is trying to make a living? Not in a very good position with the current economic model. It essentially leaves him or her in the position of a serf begging for a job and competing with thousands of others for work. The serfs were even better off because at least their labor was needed. Today's industrial reserve army is not really needed by the capitalists and corporatists who control the economy. That means two things: 1) the value of labor is depreciated because so much of it is available and unneeded and 2) there is a growing percentage of the population that must either be sustained by some form of welfare or unemployment compensation or cast to the wolves to beg, borrow and steal.

What is needed is a new economic paradigm which recognizes that very little labor is needed and machines can do most of the work. What would that new economic model look like? There would need to be a much larger leisure class than now exists. The wealthy are very few in number as a percentage of the population as a whole. They don't have to work because they have a steady stream of income which represents a return on their assets. Ownership of real estate produces a return in the form of rent. Ownership of stock produces a return in the form of dividends. Interest income is at an all time low because interest rates are so low, but when they go up again, people will be able to make a living if they have enough money in money market, CD and savings accounts. Unfortunately the distribution of wealth is way out of whack. Those in a position of being able to make a living off of so-called unearned income are very few. Those in the position that their only recourse is to make a living from their labor are the vast majority. What is needed is to turn this situation around so that the vast majority can make a living off of return on assets and only a small minority, whose labor is actually necessary for the functioning of society, will be necessary to make money from work. Or the work could be spread around so that everyone might work a few hours a week and make their living mainly on the return on assets or acquired wealth and a small portion of their living off their labor.

This is effectively what advanced societies (not including the US) have done. A large portion of the wealth of the society is held publicly. This does not preclude the private acquisition of wealth, but insures that the distribution of wealth is not as skewed as it is in the US. This makes it possible for the less fortunate, the less able and the unemployed to make a living as a return on public wealth. The fortunate do not need public assistance, but the unfortunate do. Public wealth can provide for free health care, free education and free unemployment compensation among other things. By taxing the rich, money is redistributed to the poor so that the processes of production and consumption can continue. Or public wealth in the form of natural resources can be sold and the profits divided evenly among the people. Many countries use their oil assets as a form of public wealth. Otherwise, all the money ends up in the hands of the wealthy and production stops because the vast majority of people have no money to consume. When money is redistributed or recycled from rich to poor, the production and consumption processes can hum merrily along. So taking money from the rich in the form of taxation and redistributing it to the poor is very important for the healthy functioning of society especially in advanced societies where most of the work is done by robots and human labor is increasingly unnecessary.

So all this banter about the rich being job creators is a bunch of hooey. The rich are not job creators; they are robot acquirerers and job destroyers. They make capital investments of a nonhuman variety because they are more efficient in the production process than are humans. For one thing machines can whiz and hum 24 hours a day. Humans need their rest. Safety standards for machines are more lax than they are for humans. Maintenance is simpler. Machines don't get sick or disgruntled. All in all if a capitalist can replace a human with a machine, he will do it. Capital investment in machines is more desirable than an investment in human capital.

So what does that say about the value of education? Essentially a college education is of diminishing value. Sure some will chase the fantasy of more and more education in order to better compete for fewer and fewer jobs. In the long run the student loan debt required to obtain a credentialization in some field will not be worth it. Since more and more people will be left to their own devices instead of hired, the sensible thing is to prepare for a life of self-employment. Instead of preparing to participate in the global economy with its attendant risks of outsourcing and downsizing, prepare to participate in the local economy in a job from which you cannot be fired and which cannot be outsourced. A college education prepares one mainly to be a servant of a corporation. It shows that one was docile and compliant enough to follow years and years of instruction, sit in classrooms and take tests successfully. It shows the employer that a potential hiree has the requisite qualities of docility and compliability to make a good employee, one who won't make waves or criticize the corporation, one who will adopt the ethos and become enculturated in corporate values, one who, in other words, will sell his soul to the corporation.

Another way to fight back against the job destroyers (not creators) is to form cooperative work enterprises such as the Mondragon corporation which is wholly employee owned. The employee, in addition to acquiring a paycheck, acquires a share of the profits as well. So the worker becomes an owner and makes part of his living from a return on assets just like the wealthy do. Wealth, therefore, is more widely distributed and can be further distributed by reducing the work week, hiring more employees and distributing wealth even more widely.

In an age in which there is a diminishing need for human labor and most work in the production process is done increasingly by machines, the rational thing to do is to distribute the necessary work more widely (i.e. reduce unemployment), reduce the work week and create a situation where each individual makes a portion of their living off of acquired public wealth. In Norway, for instance, the old age pension system is entirely funded by profits from a publicly owned asset: oil. These profits then are invested conservatively so they will be available to future generations.

June 27, 2011

Republicans continue on their propaganda campaign that cutting taxes leads to economic and employment prosperity, in defiance of a mountain of evidence to the contrary.

“Everything is on the table” say Senate Minority Leader Mitch McConnell and House Majority Leader Eric Cantor when referring to the ongoing budget debate as the deadline looms to raise the nation’s debt ceiling. But we know that’s not at all true. There is, in fact, one glaring item that as far as Republicans are concerned is most certainly NOT on the table, and we know this because the very same gentlemen who’ve told us that “everything is on the table” have also told us explicitly that, in reality, not everything is on the table. They’ve told us that the one thing that has been the single biggest contributor to our nation’s debt and deficit crisis over the last 10 years is a complete non-starter (Cantor’s words).

That one thing: Taxes. It is the single most divisive issue in American politics today; perhaps even more so than the current Battle Royale over Medicare. Democrats insist that the wealthiest Americans need to pay their fair share; that the Bush tax cuts of 2001 and 2003 have led us into an economic abyss and that they need to be eliminated (something that by law actually should have happened already). Republicans insist that we’re being taxed into oblivion, which they claim is directly responsible for our current economic crisis. Their plan is to further cut taxes—and government regulation, but that’s another issue for another post—and sit back and watch as the economy mystically, magically grows and sprouts millions of new jobs.

A little recap: During the Clinton administration, taxes went up slightly to what were historically very moderate levels, the top tax rate being 39%. The economy grew by leaps and bounds, 20 million jobs were created during Clinton’s eight years in office (compared with a paltry 1 million new jobs during Bush’s eight years), he left a budget surplus of $246 billion when he handed the reins to George W. Bush, and according to the CBO and Bush’s own Office of Management and Budget had Clinton’s policies remained in place the national debt would have been paid off by 2009.

A look back at the numbers in January 2001, when Republicans took complete control of the government (both houses of Congress and the White House), finds an unemployment rate of 4.2%, up from 4.0% in January of 2000 (courtesy of the Bureau of Labor Statistics). Compare that to the 7.8% in January 2009 (when Obama took office) and the current 9.1% figure. Given that the statistical equivalent of full employment is generally considered to be somewhere between four and five percent unemployment, it becomes clear that the higher tax rate has absolutely nothing to do with high unemployment numbers, since tax rates currently sit at historical lows.

Our economy as a whole was clearly better off in the late 90’s.

Just for a little historical perspective: Republican wunderkind Ronald Reagan, 1 ½ years into his presidency, presided over the highest unemployment rates since WWII, with unemployment holding steady at well over 10% for 10 months between 1982 and 1983, reaching a high of 10.8%. This after implementing one of the largest tax cuts in history at the time.

Last week I wrote about what the official Republican budget plan looks to do to Medicare: In short, they want to kill it altogether. But their plan isn’t any more credible on tax policy. It should be common knowledge by now that the basic premise behind Republican economic policy is tax cuts: When the economy is struggling, you cut taxes. When the economy is booming, you cut taxes. When unemployment is high, cut taxes. Their theory is that tax cuts spur job growth by putting more money in the hands of businesses, which in turn cause businesses to hire more workers. It’s a nice theory, but complete fantasy.

The Republican “Path to Prosperity” does precisely that: It cuts taxes to where the top rate sits at 25% (compared to 36% now, which in truth is a 28% effective rate), claiming they can balance the budget by slashing revenues. And according to the CBO, they actually do manage to balance the budget and run a slight ¼% surplus beginning in 2040. But to do this, 68% of medical costs are shifted directly to seniors instead of the 75% that is currently covered by Medicare.

In 2001 the United States had a budget surplus. By 2002 that surplus was gone, and the U.S. began to see the debt and the deficit both skyrocket out of control. What was the leading cause of the exploding debt and deficit? Well, every credible analysis says that it was the Bush tax cuts that are the primary culprit.

Study after study after study have shown us that the single largest contributor to our current debt and deficit crisis are the Bush tax cuts of 2001 and 2003. The Center for Budget Policy and Priority have released more graphs demonstrating this than Sadaharu Oh has base hits, yet Republicans continue to double and triple down on the same disastrous policies.

Republicans like Paul Ryan and Tim Pawlenty, the former Republican governor of Minnesota and current candidate for president, are selling the gullible public a suicide kit. (See this one of many analyses of Pawlenty’s recently released budget plan, which has been ridiculed and derided across the political spectrum.) They continue to insist that it was Obama’s policies that have driven the debt and deficit in two years, and not Republican policies. But this study by the CBPP definitively shows us otherwise.

According to the study, under current policies (which includes maintaining the Bush tax cuts), the U.S. debt will reach $20 trillion by 2019, and the Bush tax cuts and the wars in Iraq and Afghanistan will account for half of that by themselves. TARP and other recovery measures? Less than 10%, with TARP and the Fannie and Freddie bailouts disappearing almost entirely from the radar. It’s the economic recovery efforts, after all, on which Republicans place the entirety of the blame for our current troubles, but that’s simply nothing less than a bald faced lie.

Republicans continue to point to past surges in economic growth as evidence that their policies work. But as Dave Weigel of Slate (a self-proclaimed libertarian, no less) points out—particularly in the case of the Reagan era—the spikes in economic growth that figures like Ryan and Pawlenty point to came after tax increases, not tax cuts. Further, it was the periods after tax cuts that saw the least amount of growth, and the biggest jump in the deficit and debt.

In fact, if nothing other than ending the Bush tax cuts happened, projections tell us that the debt would level off completely.

The continued insistence by Republicans that raising taxes cuts economic and employment growth off at the knees has been repeated so often that the more gullible among us accept it as fact with absolutely no accompanying evidence. We’ve seen that the exact opposite is true, though, or at the very least that tax rates have little to do with employment numbers. In fact, it can be argued that raising taxes only moderately can spur job growth. In 1986 Ronald Reagan, signed a tax reform bill that had the effect of raising taxes on the wealthy. What happened to the unemployment rate? January 1986 saw unemployment at 6.7% and hovering around 7% for most of the year before steadily declining through 1989 and into 1990, reaching a low of 5.0%.

So here we sit in 2011 with major economic and budget problems, with over 12 million unemployed and a major jobs crisis. Republicans surged to control of the House of Representatives on a “jobs, jobs, jobs” campaign meme in 2010, yet all we hear about is the debt and the deficit, and how it’s the Democrats and President Obama who are to blame. We have not seen one single jobs bill come out of Congress. Not. One.

With any and all efforts by Democrats to address economic issues being treated with utter contempt by their Republican counterparts, it’s no wonder our economy is slipping backward instead of continuing to improve. If Republicans continue their intransigence on revenues we will surely see our entire country fall into oblivion—both economically and culturally. Republican policies have led to a shocking and growing disparity in income levels between the very rich and the withering middle class. A healthy economy is one that is sustained by the purchasing power of its middle class. At the rate we’re going, and if Republicans have their way, it won’t be long before the middle class disappears completely, and we’re left with two distinct classes of Americans: The über wealthy, and the working poor who have barely enough to secure the bare essentials. It’ll be the 1920’s all over again. Which is exactly what Republicans want: A return to the “good old days.”

June 18, 2011

Today the President met with business leaders on his “jobs and competitiveness council,” who suggested more public-private partnerships to train workers, less government red-tape in obtaining permits, and more jobs in travel and tourism, among other things. The President then toured a manufacturing plant in North Carolina, and made an eloquent speech about the need for more jobs.

Fluff.

Doesn’t the White House get it? The President has to have a bold jobs plan, with specifics. Why not exempt the first $20,000 of income from payroll taxes for the next year? Why not a new WPA for the long-term unemployed, and a Civilian Conservation Corps for the legions of young jobless Americans? Why not allow people to declare bankruptcy on their primary residences, and thereby reorganize their mortgage debt?

Or a hundred other ways to boost demand.

Fluff won’t get us anywhere. In fact, it creates a policy vacuum that will be filled by Republicans intent on convincing Americans that cutting federal spending and reducing taxes on the rich will create jobs.

Most Americans are smart enough to see through this. But if the Republican snake oil is the only remedy being offered, some people will buy it. And if the President and Democrats on Capitol Hill continue to obsess about reaching an agreement to raise the debt limit, they risk making the snake oil seem like a legitimate cure.

The puff balls being offered by the CEOs on the President’s jobs and competitiveness council are hardly a substitute. These CEOs won’t suggest hard-ball ideas to boost demand. Why should they? Their companies rely less and less on consumers in the United States – and, for that matter, on American workers. For several years now, these companies’ foreign sales have been growing faster than their US sales and they’ve been creating more jobs abroad than here.

Consider GE, whose Chairman and CEO, Jeffrey Immelt, is also the chairman of the President’s jobs council. By the end of last year, 54 percent of GE’s 287,000 employees worked outside the United States. That’s a turnaround from as recently as 2005, when a majority of the firm’s workers were still located in the United States.

GE and the other companies represented on the President’s jobs council will continue to do fine regardless of shriveled demand in the United States. But unless demand is boosted here, American workers will continue to be hard hit.

If the choice is between Republican snake oil and the puff balls of the President’s job’s council, America will be in deeper and deeper trouble. So will the President.

Washington was built on a swamp. In the summer, temperatures can reach over 100 degrees — as they did over the last few days when I made the rounds of Washington Democrats, repeatedly asking why no bold jobs plan is emerging.

Here’s a sample of their responses:

“Dead in the water. We’ll be lucky if we get votes to raise the debt ceiling without major spending cuts this year and next.”

“Republicans beat us up so bad over the first stimulus there’s no way we’re gonna try for a second.”

“We got them [Republicans] cornered on Medicare. Now they want to change the subject to jobs. Forget it.”

“No need. We’ll see job growth in the second half of the year.”

“The President doesn’t want to put anything on the table he can’t get through Congress.”

And so it went. Not a shred of urgency.

This morning I was on ABC’s “This Week,” debating jobs and the economy with Republican Senator Richard Shelby of Alabama. Shelby restated the standard Republican playbook of spending cuts and tax cuts (except for one instant when he inadvertently conceded America emerged from the Great Depression only when government spent big time mobilizing the nation for World War II).

But what struck me most was the similarity between Shelby’s overall attitude and that of the Democrats I talked with — a kind of shrug of the shoulders, a sense that it’s really not all that bad out there, and that nothing can be done anyway. (In the green room, before going on, Shelby told me employment in northern Alabama was actually fairly good and the problem was near the coast.)

The recovery is stalling across the nation yet in the Washington swamp it’s business as usual.

Americans are scared, with reason. We’re in a vicious cycle in which lower wages and net job losses and high debt are causing consumers to cut their spending — which is causing businesses to cut back on hiring and reduce pay. There’s no way out of this morass without bold leadership from Washington to rekindle consumer demand.

If the Democrats remain silent, the vacuum will be filled by the Republican snake oil of federal spending cuts and cut taxes on big corporations and the wealthy. Democrats — starting with the President — must have the courage and conviction to tell the nation the recovery is stalling, and what must be done.

The Dow ended the week below 12,000 for the first time since March. This is the sixth straight week of downs for the Dow. It’s almost as bad over at the Nasdaq. All the gains racked up in 2011 have now been erased.

What’s going on?

The real economy is catching up with the financial economy, as it always does eventually. Wall Street is built on smoke and mirrors, while the real economy is based on jobs and wages. Smoke and mirrors can only take you so far – as we learned so painfully three years ago.

Jobs and wages stink, if you haven’t noticed. They’ve been bad for months, even before this week’s data made it fairly clear the recovery has stalled.

Stock prices had been rising nonetheless. That was partly because big corporations were enjoying big sales and fat profits from their foreign operations. But foreign sales are slowing. Chalk that up to the European debt crisis, Europe’s insane austerity measures, Japan’s tragedy, and China’s concerns about inflation.

Meanwhile, other companies have been busy restocking inventories in the hope American consumers will be in a mood to buy. But that hope is coming to an end, as the reality dawns that American consumers can’t and won’t buy very much, given their shrinking home values, high debts, and job worries.

Stock prices were also rising because of Wall Street’s certitude that it can make loads of money from the gullibility of millions of small investors. Here’s where the smoke and mirrors come in.

Over the past year, the Street lured small investors back into the market on the smokey promises that the worst is over and stock prices are bound to rise. The lure became a self-fulfilling prophesy. As investors re-entered the market, they bid up stock prices. Hence, the mirror.

Insiders on the Street are always the first to bail when they sense they’ve been overselling, as they started to do a few weeks ago. This gives them a second opportunity to make money off small investors — by selling short.

The nation’s second-largest financial redistribution in history (the largest, on a percentage basis, occurred in 1929) came in 2007 and 2008 – from small investors and their pension funds to the Street’s savvy traders who shorted them. Now it’s been repeated, although on a smaller scale.

And Washington? Completely clueless. Our representatives in the nation’s capital continue to obsess about future budget deficits and games of chicken over raising the debt ceiling — neither of which has anything at all to do with the stalled recovery and the carnage on the Street.

Otherwise, the airwaves are filled with Weiner’s tweets, Gingrich’s implosion, and Palin’s emails. When times are tough we look for entertainment.

The silence is deafening. While the rest of the nation is heading back toward a double dip, Washington continues to obsess about future budget deficits. Why?

Republicans don’t want to do anything about jobs and wages. They’re so intent on unseating Obama they’d like the economy to remain in the dumps through Election Day. They also see the lousy economy as an opportunity to sell Americans their big lie that government spending is the culprit — and jobs will return if spending is cut and government shrinks.

Democrats, meanwhile, don’t want to admit the recovery has stalled.They worry such talk will further undermine consumer confidence or spook the bond market. They don’t want to head into the election year sounding downbeat. And they don’t think they have the votes for anything that will have much effect before Election Day anyway.

But there’s a third reason for Washington’s inaction. It’s not being talked about — which is itself evidence of the problem.

The unemployed are politically invisible. They don’t make major campaign donations. They don’t lobby Congress. There’s no National Association of Unemployed People.

Their ranks are filled with women who had been public employees, single mothers, minorities, young people trying to enter the labor force, and middle-aged men who have been out of work for longer than six months. You couldn’t find a collection of people with less political clout.

Women who had been teachers, public health professionals and social workers have been hit hard. These jobs continue to be slashed by state and local governments. Public schools alone accounted for nearly 40% of the nation’s total public sector job losses in the last year. From March 2010 to March 2011, women lost 214,000 public sector jobs, compared with a loss of 115,000 public jobs by men.

Unmarried mothers are having a particularly difficult time getting back jobs because their work was heavily concentrated in the retail, restaurant and hotel sectors. Many of these jobs disappeared when consumers reduced their discretionary spending, and they won’t come back in force until consumers start spending more again.

According to a new report by the California Budget Project, the recession erased more than half the jobs single mothers in California had gained from 1992 to 2002. The result has been a drop in the share of unmarried mothers in jobs, from 69.2% in 2007 to 58.8% in 2010. Unmarried mothers who still have jobs are working fewer hours per week than before.

Blacks also continue to be hard hit. Their unemployment rate here in California reached 20% this past March, up 5% from a year ago. That’s more than double their rate before the downturn. Some of this is because of the comparatively low education levels of many blacks, and their weak connections to the labor market. Some is due to employer discrimination. Blacks were among the last hired before the recession and therefore among the first to be let go in the downturn. That means they’ll be among the last hired as the economy recovers.

Many young people who have never been in the job market are unable to land a first job. Employers with a pick of applicants see no reason to hire someone without a track record, particularly those without much education. Unemployment among high school dropouts is hovering around 30%. Even recent college graduates are having a much harder time than usual finding a job. Many are settling for jobs that don’t ordinarily require college degrees, which pushes those with less education even further back in the line.

Older workers who have lost their jobs are at the greatest risk of continued unemployment. Employers assume they aren’t as qualified or reliable as those who are younger and have been working more recently. According to research by the Urban Institute, once you’re laid off, your chance of finding another job within a year is 36% if you’re under the age of 34. But your odds drop the older you get. If you’re jobless and in your 50s, your chance of landing another job within the year is only 24%. Over 62, you’ve got only an 18% chance.

What do these jobless have in common? They lack the political connections and organizations to get the ears of politicians, and demand policies to spur job growth.

It's the beginning of summer: warmer weather, longer days, the end of the school year. And that means graduation for thousands of young people across the U.S.; graduation with more student debt than ever before, and into a job market that is anything but promising.

Young people between the ages of 16 and 24 face an unemployment rate nearly twice that of the rest of the population, according to data from the Economic Policy Institute. 2010's 18.4 percent rate for youth was the worst in the 60 years that economists have collected such data. ColorLines notes that in 2010, 8.4 percent of white college graduates were unemployed, 13.8 percent of Latino graduates, and a dismal 19 percent of black graduates.

Those bright, shiny new degrees simply aren't worth the paper they're printed on all too often. The cost of a college degree is up some 3,400 percent since 1972, but as we all know too well, household incomes haven't increased by anything close to that number -- not for the bottom 99 percent of us, anyway.

Pell Grants for students have shrunk drastically in relation to the ballooning cost of a four-year college, and Paul Ryan wants to cut them even more, pushing some 1.4 million students into loans, more of which come each year from private lenders with little to no accountability.

New legislation, introduced last week in the House and Senate, would attempt to put a bit of control on those private lenders, restoring the bankruptcy rules so that private student loans may be discharged through bankruptcy. Currently, private as well as government-issued and guaranteed loans will stick with you even through bankruptcy proceedings, saddling far too many graduates with debt for life.

Still, bankruptcy reform is hardly a solution to the problems at hand. Imagine 18 percent of college graduates declaring bankruptcy when they can't find a job, upon graduation, that allows them to make payments on their loans?

Small wonder that many are calling the student loan crisis a bubble possibly worse than the credit card or housing bubbles. Small wonder that when polled by the Pew Research Center and the Chronicle of Higher Education, 57 percent of Americans said higher education doesn't provide a good value, and 75 percent said it is too expensive for most to afford. Yet the lucky graduates who do have jobs still make, on average, $20,000 a year more than those without degrees. It seems that higher education, as with so much else in this society, is turning into a way to keep those who already have money making more of it.

In other words, all of Obama's declarations that we will "win the future" through education, notes Kai Wright and Stokely Baksh at ColorLines, mean little if there are no jobs for those graduates even with their sparkling credentials.

Even David Brooks at the New York Times this week has some sympathy for the latest crop of recession graduates, noting that their education hasn't prepared them for the world they face. "No one would design a system of extreme supervision to prepare people for a decade of extreme openness," he says, but then of course goes on to blame "baby boomer theology" for the struggle of today's youth.

Paul Mason at the BBC calls them "the graduates with no future," and he's been following the role they've played in protests not only in Britain but across the Arab world, particularly in the revolutions in Egypt and Tunisia.

After all, what's left for an educated generation, brought up on social networking tools, to do but apply those tools to organizing protests? We haven't seen a student movement in the U.S. like the one in England yet, but we've seen the role of students in Wisconsin, Ohio, New Jersey and California.

Brooks would have us believe that "expressive individualism" is the problem with this downwardly mobile generation, but those same students he decries for their selfishness are busy using their skills to fight even more selfish governments, bent on cutting services for students, the poor and the elderly to give more money to those most selfish of all entities: corporations. Individualism is hardly the problem with the students -- it is, instead, the problem with the societies.

One thing is sure: a rising tide of unemployed, debt-ridden youth is not simply going to go away without action. If the federal and state governments don't do something soon, the "graduates with no future" may well bring the unrest here.

May 26, 2011

Billionaires are different from you and me, for obvious reasons, including the fact that they buy much pricier baubles than we do."The River Styx" by Lotta Tjernström

A sleek car costing $100,000? Why, for them, that's just an easy impulse purchase. A few million bucks for a Matisse original? Go ahead — it'll liven up the hallway. How about throwing a fat wad of cash at a university to get an academic chair named for you? Sure, it's all part of the fun of living in BillionaireLand.

Then there is the top crust of the upper-crust — such megalomaniacal megabillionaires as the Koch brothers. Using money from their industrial conglomerate, their foundation and their personal fortunes, these two far-out, laissez-faire extremists are literally buying public policy. Their purchases of everything from politicians to the tea party help them push the privatization of all things public and the elimination of pesky regulations and taxes that crimp their style.

To advance their plutocratic privatization cause, brother Charles has even gone on a shopping spree for an invaluable bauble that most of us didn't even know was for sale: academic freedom. And it's surprisingly cheap!

For only $1.5 million, Koch bought a big chunk of the economics department of Florida State University a couple of years ago. His donation gives him control of a new "academic" program at this public institution to indoctrinate students in his self-serving political theories.

The billionaire gets to screen all applicants, veto any he deems insufficiently ideological, and sign off on all new hires. Also, the department head must submit yearly reports to Koch about the faculty's speeches, publications and classes, and he evaluates the faculty based on "objectives" that he sets.

Charles has made similar purchases of academic freedom at two other state universities, Clemson and West Virginia. Also, in a May 20 piece at Alternet.org, investigative researcher Lee Fang reveals that Koch has paid $419,000 to buy into Brown University's "political theory project," $3.6 million to establish Troy University's "center for political economy" and $700,000 for a piece of Utah State's Huntsman School of Business, which now has the "Charles G.Koch Professor of Political Economy."

Imagine the screams of outrage we'd hear from the Kochs if a labor union were doing this.

A recent article in The Onion, the satirical newsweekly, printed a downsize-big-government spoof that Charles and David would love to turn into reality. The parody disclosed that President Obama had come up with a surefire plan to balance the federal budget: Rob Fort Knox! "I've got the blueprints," Obama is quoted as saying, "and I think I found a way out through a drainage pipe."

Unfortunately, with today's political climate dominated by howling winds from the far-right fringe, there's no longer any room in American culture for satire. Sure enough, some laissez-faire extremists at such Koch-funded corporate fronts as Cato Institute and Heritage Foundation are presently howling for the government to sell all of America's gold stored in Fort Knox. Noting that we have billions worth of bullion in the vaults, a fellow from Heritage made this keen observation: "It's just sort of sitting there."

Uh, yeah, professor. Like Mount Rushmore, the Grand Canyon, the Lincoln Memorial and other national assets — being there is the point.

Yet these ivory tower ideologues are using the current brouhaha over the budget deficit as an opening to push their loopiest fantasies of selling off all of America's public properties, facilities, systems and treasures to create a no-government, plutocratic paradise. Just spread our public goods out on tables, like a flea market from hell, and invite the global rich to buy it all.

For example, a fellow from another Koch-funded front, the American Enterprise Institute, observes that the government could raise billions of dollars to retire that pesky deficit simply by selling our interstate highway system. Americans would then have to pay tolls forever to the corporate owners, but hey, he exclaims, remember that tolls "work for the River Styx, why not the Beltway?"

What a perfect metaphor for privatization! In ancient mythology, dead souls must pay a toll to be ferried across the River Styx and enter the depths of hell.

National radio commentator, writer, public speaker, and author of the book, Swim Against The Current: Even A Dead Fish Can Go With The Flow, Jim Hightower has spent three decades battling the Powers That Be on behalf of the Powers That Ought To Be - consumers, working families, environmentalists, small businesses, and just-plain-folks.

May 22, 2011

On Friday morning, I'll be taking part in that annual rite of passage -- the commencement speech. I'll be delivering mine at Sarah Lawrence, one of the great colleges in America.

My speech, of course, will be imbued with all the optimism and hope about the future that the occasion is steeped in. But, after looking at all the data, there is no question that "commencement" has taken on an ironic twist.

For many of the graduates spilling into the job market throughout the nation, there isn't going to be much to commence. Economically at least, this is an especially rough time to be graduating from college.

For starters, just getting to Graduation Day has become historically burdensome. For the first time, total outstanding student loan debt will be higher than total credit card debt -- going over $1 trillion. In 2000, the figure was under $200 billion.

In 2008, two-thirds of those getting their bachelor's degree had to go into debt to do so, compared to only half in 1993. And as of 2011, Mark Kantrowitz, publisher of the websites FinAid.org and Fastweb.com, estimates that the average graduate will enter the job market with a debt load of over $27,000.

This actually isn't all that surprising, given the skyrocketing cost of tuition, which has been going up at an annual rate of 5 percent. According to a briefing paper by the Economic Policy Institute, in 2008-2009, the total cost of attending college on-campus was over $18,000 for those going to a public school, and over $38,000 for those at a private school. When you consider that over the same period the median household income in the U.S. was $49,777, it's not hard to see why even a public college is out of reach for so many American families, at least without going deeply into debt.

And the job market won't be doing the Class of 2011 any favors in helping to repay that debt. According to EPI, the unemployment rate for those aged 16 to 24 in 2010 was 18.4 percent, the highest it's been since the number has been tracked, going back 60 years. From April of last year until March of this year, the unemployment rate for recent college graduates hovered around 9.7 percent. In 2007, it was just over 5 percent. And while the fact that we're still clawing our way out of a recession affects those figures, at roughly the same point in the last two recessions -- 1992 and 2003 -- the unemployment rate for new grads was 6.9 percent and 6.4 percent, respectively.

As is the case with the overall unemployment rate, the jobs crisis isn't affecting all graduates equally. In 2007 the unemployment rate for recent white college grads was just over 5 percent, 6.6 percent for Hispanic grads and around 13 percent for black grads. By last year, those differences had grown alarmingly worse. For white grads, the unemployment rate went up 3.3 percent, for Hispanic grads it was up 7.2 percent, and for black graduates it was up 5.9 percent -- for a total black grad unemployment rate of a devastating 19 percent.

For those graduates who do manage to find jobs, their average salary will be $36,866. In 2009 it was $46,500. And a poll by the consulting firm Twentysomething, Inc. found that 85 percent of new graduates will end up moving back in with mom and dad. Unfortunately, given the obsessive focus on the deficit gripping Washington, an emphasis on job creation is unlikely any time soon.

At some point, we can hope, the recession is going to be over, and then all these recent graduates will get back on track, right? Actually, no. Abigail Wozniak, an economist at Notre Dame, found that the effects of graduating into an economic downturn far outlast the downturn itself -- sometimes as long as a decade. "A bad hand at the beginning of a game where everything is connected has lasting negative effects," says Wozniak.

And according to Carl Van Horn, of the Center for Workforce Development at Rutgers, the effects of graduating into a recession go beyond dollars and cents. "They tend to be less risk-oriented," Van Horn said of recession-era grads. "They're risk-averse. If you can get that job in communications, then you're less likely to look over your shoulder and say maybe there's a better job down the road. You say, well, I better stick with this one."

There is, however, a silver lining to graduating in such tough economic times. Conventional wisdom says that today's graduates are going to be less likely to take chances, less likely to pass up the safe bird in the hand, but, in fact, there is now a higher premium on taking risks and following your dreams, creating your job instead of just looking for one.

The road ahead is definitely rockier than the Class of 2011 imagined it would be. But while this may be the most debt-burdened graduating class in history, it's also the most tech-savvy, the most connected, and the most engaged.

This year's graduates need to embrace this, and build on it, looking for innovative ways to do well for themselves while doing good for others. And, while they're at it, they should use these attributes to help hold our leaders accountable, and keep them from turning away from the mess they've made -- with so many missed opportunities and perverted priorities.

May 21, 2011

We hear all this blather about how the US is such a wealthy nation. Not true. Before Ronald Reagan became President, the US was the world's largest creditor nation. People and countries owed us more money than we owed them. Now some 30 years later the US is the world's largest debtor nation. This is the definition of a poor - not a rich - nation. China on the other hand holds $3 trillion in international reserves including $1 trillion of US debt. Other nations have sovereign wealth funds which contain vast amounts of money. The US has only a huge pile of debt - some $14 trillion worth. The US used to be the world's largest importer of raw materials and exporter of manufactured goods. Now we're the world's largest exporter of raw materials and importer of manufactured goods with a trade deficit of some $600 billion a year. At the present time the US has a deficit of some $2 trillion in needed infrastructure repairs while China is building high speed rail track at such a rate that it will soon have more miles than the rest of the world combined. Meanwhile, the US spends more on its military establishment than the rest of the world combined while cutting safety nets and education for its own citizens.

Americans have pulled the wool over their own eyes. Despite having a national debt of $14 trillion, despite having gone from a net creditor nation to a net debtor nation in little over 30 years, despite having enormous trade deficits month after month, year after year, despite having an infrastructure in need of $2 trillion worth of repairs, Americans think they live in a wealthy nation. The truth of the matter is that the US is a poor nation within which live a lot of wealthy individuals. China on the other hand holds a little over $1 trillion of US debt making it a fairly wealthy nation albeit with a large but diminishing number of poor people. China is building new infrastructure at an astonishing rate. It's a fallacy to think a wealthy nation is a nation comprised of a large number of wealthy individuals. In fact many Banana Republics are comprised of a small class of wealthy individuals surrounded by a sea of poverty. The US is on track to becoming one of those. A recent survey showed that there is a higher level of inequality in the US than exists in Pakistan, Ethiopia and Ivory Coast.

It is not hard to diagnose why the US is a poor nation which thinks itself rich while China is a rich nation which passes itself off as being poor. All the free trade agreements like NAFTA and CAFTA have resulted in the decimation of the US manufacturing base. US factories are closing in droves:

2010 comes in the midst of a stunning wave of U.S. factory closings that stretches from coast to coast. Once upon a time America was the greatest manufacturing machine that the world has ever seen, but now it seems as though the only jobs available for working class Americans involve phrases such as “Welcome to Wal-Mart” and “Would you like fries with that?” Even though the population of the United States has exploded over the last several decades, the number of Americans employed in the manufacturing sector today is smaller than it was in 1950. America has become a voracious economic black hole that ”consumes” as much as possible and yet actually produces very little. The United States is becoming deindustrialized at a blinding pace, and it is becoming increasingly difficult for blue collar American workers to find jobs that will actually enable them to support their families. The sad truth is that American workers don’t have a whole lot to actually celebrate this Labor Day. 14 million U.S. workers are “officially unemployed” and tens of millions of others have been forced to take part-time or temporary jobs that they are overqualified for just so they can survive. Unfortunately, this is not just a temporary situation for American workers. As millions of good jobs continue to get outsourced and offshored, Labor Day celebrations in coming years will be even more depressing.

Since 2001, The U.S. Has Lost 42,400 factories. The "giant sucking sound" that Ross Perot predicted has become a point of actual fact. But this doesn't seem to bother America's leaders. They are dedicated to the policy that US consumption drives US GDP and as long as US GDP is the largest in the world, who cares? Sales are up! However China, as the world's second largest economy as measured by GDP, is on track to overtake the US in the near future. American politicians only care about transnational corporations, nominally American, and how they can maintain the US consumer appetite (and their profit margins) for buying their goods even though most of those goods are produced overseas. They coddle these corporations by lowering their taxes, having their lobbyists drill loophioles in the tax code and giving them a "tax holiday" during which they can "repatriate" their overseas capital and bring it "home" without any tax consequences.

The model of trickle down economics, long since discredited, is still being championed by right wing politicians with the result that the fig leaf of prosperity is being shredded to reveal a naked transfer of wealth from the middle class to the upper one per cent. Naked power grabs are becoming the order of the day as the recent vote to extend taxpayer subsidies to the five Big OIl companies, despite their being the most profitable corporations in human history, reveals. At the same time those same right wing policticians are demanding that the budget be balanced on the backs of the poor and middle class. While countries such as Norway fund their safety net with royalties from oil drilling, the US gives away its natural resources to oil corporations including BP which is not even headquartered in the US. The neocon model of privatization and eliminating safety nets, although unsuccessful in Argentina and Brazil, is achieving considerably more success when practiced here at home. Trade unions are being decimated. States are being turned into fiefdoms and dictatorships. Public education is being defunded. There is an all out assault on teachers, police and other public workers. The notion that government doesn't work and can't be trusted is being fostered.

The US is becoming the very definition of a Banana Republic. It is becoming a nation largely bereft of a middle class, a nation in which there exists a small class of extremely wealthy individuals surrounded by a sea of impoverishment, a nation of antiquated infrastructure, a nation in which there is no there there. All that exists is a diminshing probablity of getting rich or even making it into the middle class. Students are being saddled with immense and obscene amounts of student loan debt. Middle classers are losing their homes to foreclosure. Poor people are being shunted aside as food stamp programs are being shut down and home heating oil allowances are drying up. The war on the poor is raging. And the American people continue to vote the guys that are screwing them into office because they pander to them with promises of unlimited rights of gun ownership and promises that they won't allow gays to marry

The US in point of fact is not a wealthy nation despite attempts to brainwash us that it is, and it's becoming poorer by the hour. But instead of implementing a rational health care system, we continue to give away billions to the pharmaceutical companies that we wouldn't have to if the government weren't prevented by law from negotiating with them. We continue to give away billions in subsidies to Big Oil and Big Agriculture. We continue to give away billions in tax breaks to the rich. We continue to pour billions down ratholes in Afghanistan, Pakistan, Iraq, Israel and many other places. .

These countries are taking us for a ride, and the Israeli President Netanyahu lectures our President on why he won't cooperate to bring about mideast peace. They are manipulating us out of our money while actually working and fighting against us as revealed by Pakistan's harboring of bin Laden. If Obama had tried to coordinate bin Laden's capture with Pakistan instead of going it alone, bin Laden would probably have been tipped off with the result that the Seals, to Obama's embarassment, would not have found bin Laden at home. What, no bin Laden? Just innocent women and children.

As China eats the US' lunch and the rest of the world rips off Uncle Sucker for billions of US taxpayer dollars, the American people should get used to the fact that we're not number 1 any more. Far from being the world's richest nation we're fast becoming one of the world's poorest nations where some of the world's richest people happen to reside. But don't worry about them. They also own villas in France, Italy and Spain. They only continue to hold US citizenship as a convenience. They could live anywhere. They could headquarter their corporations anywhere. It's still convenient for them to headquarter here so they can use their lobbyists to rip off American taxpayers and sell into the American consumer market. But as time goes on most of their sales will be to emerging consumer markets in China and elsewhere.

May 18, 2011

It’s college commencement season in America, a time of excitement and celebration. For the millions who will graduate this year, the events of this month and next represent not just the end of college but the beginning of a new and meaningful chapter in their lives.

That chapter, for most, however, will be accompanied by hefty student loan payments. According to the Wall Street Journal, the average debt for a bachelor’s degree recipient in 2011 will reach almost $23,000, making this year’s graduating class the most debt-burdened in history. In fact, student loan debt is expected to outpace credit card debt, probably reaching more than $1 trillion this year.

This is partly a function of tuition, which the Wall Street Journal reports has increased at a rate of 5 percent a year. It is also a function of a flailing economy in which parents are far less able to help their children pay for college. It’s no wonder that a staggering 85 percent of 2011 college graduates are moving back home after graduation.

Still, for many, if not most, college students, the decision to take out loans to pay for a college degree will be one of the most important investments they will ever make in their future, and the cost of repayment, while historically high, will be worth it. Last month’s jobs report found that the unemployment rate among college graduates was 4.5 percent, half of the national unemployment rate. And according to a College Board report cited by the New York Times, the median bachelor’s degree recipient working full-time in 2008 made 65 percent more than the median high school graduate.

But there is a growing group of students who will find a harsh reality when they enter — or at least try to enter — the workforce. These are the students who have enrolled in the growing industry of for-profit colleges.

For-profit colleges aren’t new to the national landscape, but over the past decade their numbers have surged dramatically, creating a $23 billion industry. In 2000, about 670,000 students were enrolled in for-profit colleges. By 2008, nearly 1.8 million were enrolled, a 225 percent increase.

These companies make their profits by aggressively recruiting students and pushing them to take out large federal loans to cover the cost of tuition. Seventy-seven percent of the revenue at the five largest for-profits comes from federal student loans and grants.

That cost of attendance isn’t cheap. According to Forbes columnist Susan Adams, tuition at for-profits is twice as high as in-state public colleges and about five times as high as two-year public colleges. And while for-profits educate 11 percent of U.S. post-secondary students, those students hold 26 percent of the nation’s student loans and make up 43 percent of those who default.

The problem for these students is not just that they are being strapped with outrageously high debt. It’s that they are being preyed upon, misled into enrolling at institutions that often lack accreditation and have dismal records of job placement. The University of Phoenix, for example, quadrupled its enrollment over an eight-year period by targeting vulnerable students to join its ranks. That group, according to Bloomberg News reporter Dan Golden, included an intellectually disabled woman with an IQ between 65 and 70, who, not coincidentally, qualified for federal aid.

There may be no more egregious example of corporate interests preying on the innocent on behalf of their shareholders than the for-profit college industry. The consequences are even worse than those stemming from predatory mortgage lenders; unlike a mortgage, student loan debt cannot be discharged in bankruptcy. Students who are deceived into enrolling in for-profit institutions are left with no exit — and no recourse. It is a tragedy of the highest degree, counter to our nation’s values. And it must be stopped.

At least 16 states have passed or proposed laws regulating for-profit colleges . The Obama administration, too, is working to regulate the industry. New rules will take effect in July that will prevent for-profits from paying recruiters based on the number of students they enroll, a process that encourages deceptive practices.

The Education Department is also considering what’s known as a “gainful employment” rule, which would prevent for-profits that fail to meet certain standards from being eligible for federal financial aid programs. The ineligible group would include colleges with high student-loan default rates and ones at which students end up having to put a large part of their salaries toward paying down their debt. But that important rule, which was supposed to be implemented in 2010, has been delayed. The Education Department now says it will take effect in 2012, but many who follow the issue closely remain skeptical.

That’s because for-profit colleges are fighting tooth-and-nail to prevent the rules from taking effect. According to the Sunlight Foundation, in 2010, the industry spent $7.57 million on lobbying, which was more than three times what was spent in 2009. It also contributed more than $1.3 million to political campaigns. The industry’s efforts are only expected to intensify. So, too, must the efforts of those fighting for legislation to rein in the for-profits.

Our debt “crisis” has become something of a national obsession — and a misplaced one at that. For all the talk of debts and deficits, we too often ignore this crisis, the real debt crisis, and its impact on millions of Americans. We owe them better.

May 16, 2011

The huge crowd of a couple thousand, as viewed from the stage. The pink flags represent pink slips received by over 4100 teachers from Southern California. (All photos by Frank Gormlie.)

Since Andy Cohen covered the meat and potatoes of the teachers’ “State of Emergency” rally already, I wanted to share some other thoughts about the event and display a sampling of the numerous photos I took yesterday, Friday the 13th while at the Embarcadero in downtown San Diego.

Crowd bound for the rally.

When I heard that the rally was going to be at the Embarcadero, I told Patty that parking would be horrendous downtown and next to impossible, so we agreed to take the trolley from Lemon Grove. She wrapped up our banner, we gathered our camera and notepad, and we hopped the 3:44 pm trolley (although by time it got to us, it was 3:50). After grabbing our seats, we looked around and saw several women wearing red T-shirts that spelled out “STOP” – Students and Teachers Our Priority. And during the ride downtown, we heard several guys who were standing up having quite an intellectual conversation – even hearing the name “Chomsky” come bouncing out. Are these teachers? we wondered on their way to the rally.

Sure enough, once the trolley pulled up to the Seaport Marina station, the entire car stood up and got off. And everyone began heading to the Embarcadero. This was great! I thought. An entire trolley from east county going to the same rally. As we crossed the tracks and Harbor Drive, we were a march in and of ourselves.

The "counter-demonstration" just a few minutes before they were to begin. The woman in red is the Koch brothers' rep.

As our little parade moved into the park, I took a right turn and headed over to the counter-rally. I had heard the Koch brothers’ Americans for Prosperity, the Young Republicans, and some tea party types were going to be holding a nearby demonstration against us and the teachers. A protest of the protest. As I approached this sideshow, I noticed almost more video cameras than people. Once in their midst, I did count twelve actual counter-demonstrators. A red-suited woman was bouncing around, saying she represented Americans for Prosperity. I asked her when her rally was going to begin. At 5 she said. One guy asked who I was – I had an OB Rag T-shirt on and was taking photos, and he showed me his sign. Later, I heard that their gig attracted somewhere between several dozen (U-T estimate) and about a hundred (estimate from a reporter).

Moving away from the tea partiers, I approached the main event and witnessed streams of folks – many in red shirts – pouring into the green east end of the Embarcadero. On the way there were small tables with mountains of water bottles and snacks being given away. Nice touch, I thought.

I also noticed there was about a dozen Harbor Patrol and City police in the vicinity. Just then, a police lieutenant walked up to me, and profusely thanked me for providing “the only information out there” about this event. That was kind of weird but I politely thanked him for that. And when I reunited with Patty who was holding our banner, she told me that one of the rally organizers had told her that the police were asking about us. “OB Rag – who are they?” It’s always good to be noticed.

Patty found a small hill just west of the main stage and planted herself and the banner. I went about taking photos and attempted to do a head count. This was very difficult as people were still moving into the park and rally area. I gave up after counting 1500.

There was a steel drum trio pounding out music, while the 4100 tiny pink flags fluttered in the wind. Two dozen students held signs with large letters proclaiming their opposition to ed cuts standing toward the crowd. I climbed up on the stage to take some more crowd shots.

Bill Freeman, head of the San Diego teachers' union.

I found Bill Freeman, head of the teachers’ union. I asked him how many people were expected, and he said 3 thousand. I then asked him why the Embarcadero had been chosen as the rally point. He replied that if it had been up to him, he would have gone for a more public site, but that CTA had chosen this particular one.

Finding Patty once again atop her hill, most of the crowd in that area were sitting on the grass. I joined them for the duration. Some OBcians joined us as well and took their positions on the green along side us.

There were a hell of a lot of people at this event. Many wore red-shirts, some light-blue ones as well. “We are one” was a favorite slogan on many of them. Many teacher groups sat together and whenever their school was mentioned from the podium, they would let out a holler. This gathering should really send a message. It was a rare occasion that this many teachers from all over the counties of Southern California were coming together.

Once the speakers started, there much applause, although only a few chants. Teachers are great, I thought, but they sure are subdued, even the many younger ones who were there. I compared them with the more militant Labor Council rally we attended back in late February, in front of the County building. But still, it was a wonderful showing overall.

Our good friend Gregg Robinson was one of the last speakers. Gregg wrote for this blog when we first began, and is known for being a good speaker. And today’s performance was not disappointing. He by far gave the most fired up speech of the rally. “Don’t let anyone tell you there’s no money for education!” he yelled out from the stage to an appreciative audience.

Gregg Robinson - at podium with arms folded - waiting to speak.

As the rally broke up, we headed back to the trolley and got on it. Our car was loaded with participants from the event all the way back east to the hinterlands. Trolley regulars looking for seats in a usually empty early evening Friday car must have freaked out. I didn’t know there was a Padres game, they probably thought.

There is a state of emergency – in education – but not just in education. It’s all over. One way to look at it, is that it’s so bad, even teachers are rallying. Teachers up and down the state were heard this week. Over two dozen were even arrested up in Sacramento, including their state union president.

Teachers have to continue to reach out, and stand with their fellow public union colleagues. We must continue to develop a genuine community-labor coalition for San Diego, and this was one more step – a giant step – in that direction.

‘Mal-employment,' a term from the '70s, has surfaced again to haunt grads

CHICAGO — Tiffany Groene is waiting tables.

Erin Crites is making lattes and iced coffees.

And Anna Holcombe is buying and selling gold.

These three Chicago women share more than just scraping by with low-paying jobs: They all have master's degrees and are unable to find work in their specialty areas.

There's even a name for their situation. They are referred to as mal-employed, a term coined in the '70s for college graduates who could not find jobs that require a degree. Instead, they settle for low-skilled jobs.

Even in rosier economic times, people with college degrees sometimes can't find jobs in their fields. But their numbers and the trend show no sign of easing during the slow and bumpy recovery from the recession.

Nationwide, about 1.94 million graduates under age 30 were mal-employed between September and January, according to data compiled by Andrew Sum, director of the Center for Labor Market Studies at Northeastern University.

Sum said mal-employment has significantly increased in the past decade, making it the biggest challenge facing college graduates today. In 2000, Sum said, about 75 percent of college graduates held a job that required a college degree. Today that's closer to 60 percent.

Uphill struggle

Though the economy is growing and new jobs are being created, Sum said, those graduating in June are not likely to see major improvements. About 1.7 million students are projected to graduate this spring with a bachelor's degree and 687,000 with a master's, according to the U.S. Department of Education.

“We are doing a great disservice by not admitting how bad it is for young people (to get a job),” Sum said.

And the longer college graduates go without working in their field, the harder it is to land interviews for jobs where they would use their degrees.

“It's hard to convince people that what I am doing is relevant,” said Groene, 27, who has tended bar and waitressed during the two years she's looked for a job related to her master's degree in public administration.

In that time, she's had one offer in her field. It came in 2009 from Chicago Public Schools but disappeared before she could start, due to budget cuts. Desperate, she took a job as a bartender. She said she quit six months later, upset by the sexual advances of bar patrons.

With no income, she moved back to her father's house in Rockford, Ill. At times, she found it difficult to leave her bedroom because she felt depressed.

She said she wasn't used to not succeeding. An avid soccer player, Groene was drafted to go to college and drafted again to become an assistant coach at Columbus State University in Georgia, where she earned her master's degree.

“You feel so down,” Groene said.

With the support of her family, she ventured out again last month and took a job as a waitress in Chicago. She said it's the best job she's had in two years. She also slowed down her job search and is back in school pursuing a master's in education.

“I can't find anything anyway,” she said, adding that more schooling allows her to start from scratch.

Experts say Groene's situation is hardly unique. When everything else fails, graduates are more likely to go back for more education. Those with a bachelor's sign up for a master's, and so on. Some take a step back, either to look for new opportunities or retool their fields of interest.

Bill White, for example, is pursuing a second bachelor's degree. He looked for a job for about six months before graduating in December with a master's in public relations and advertising. Unable to land one, the 28-year-old has shifted his focus to mechanical engineering.

While college graduates are still more likely to land a job than those without degrees, the fact that so many are not finding jobs in their fields has raised questions about the payoff of a college education.

Since he got his bachelor's degree last May, Kirk Devezin II has worked full-time a little more than six months and has freelanced. He has never made more than the $10.36 an hour he earned as a barista at Starbucks when he was a student at Eastern Connecticut State University.

“I apply to jobs constantly, constantly, constantly,” he said.

He has interviewed for positions related to his communications degree, but lately, all the interviews have been for barista and cook jobs, and one at a carwash. Sensing that employers in low-wage industries might think he is overqualified, he has left his college degree off the applications.

“It just seems like it was just a big waste of time,” said Devezin, 24, who still lives in Connecticut. “And I'm $20,000 in debt.”

The numbers show that he's wrong — experts say earning a college degree is still the best way to avoid unemployment.

Smaller value, but still value

“The value of the degree is still there; it is just not returning as much in investment as it would a few years ago,” said Carl Van Horn, director of the John J. Heldrich Center for Workforce Development at Rutgers University.

In fact, those who land a job in their field do well, but those who are mal-employed earn just slightly more than high school graduates, according to Sum's research. For example, the mean wage for those mal-employed is $476 a week, while those with a job that requires a degree earn $761. By comparison, a high school graduate earns $433.

Erin Crites, 27, makes $10.55 an hour as a barista at a coffee shop in downtown Chicago. She is struggling to pay her bills and has considered cutting her health insurance — a situation she was hoping to avoid by earning a master's degree.

Crites graduated in June from Dell'Arte International, a theater school based in California. She sought a master's degree in ensemble-based physical theater, figuring that such a specialized degree would make it easier for her to land a job. But Crites graduated as schools cut back art programs and arts-based nonprofits struggled to secure grants.

“You can get as close as you can to work solely as an artist without a source of secondary income ... but it's almost impossible,” she said.

Still, Crites is determined to make it in her field. As long as she keeps her passion, she will find a way in, she said.

Though barely getting by, Crites is lucky. Nationwide, there were about 2 million unemployed people older than 25 with at least a bachelor's degree — nearly 1.3 million more than in March 2007, according to the U.S. Labor Department.

On a small plaza near the DePaul University College of Law, a group of students about to graduate were socializing when a reporter approached. Most said they didn't expect to land a law-related job. One student said he was told by a potential employer that there was no reason to hire him when the firm could hire an experienced lawyer for the same salary.

That situation is becoming more commonplace.

Anna Holcombe, who has a master's degree in public relations and advertising, said she's often competing for jobs against people who only have bachelor's degrees or are willing to work for free just to get their foot in the door.

“It's a struggle,” she said, adding that at age 31 she doesn't have the luxury of being able to work for free. She has responsibilities, including bills due at the end of the month.

Until she gets a position in her field, Holcombe is holding on to her job as a sales associate at a retail store. She got the job to pay bills while at school, never thinking it would be so difficult to let it go.